A three-year bond with a 10 percent annual coupon has cash flows of $100 at Year 1, $100 at Year 2, and pays the final coupon and the principal for a cash flow of $1100 at year 3. The spot rate for Year 1 is 5 percent, the spot rate for year 2 is 6 percent, and the spot rate for Year 3 is 6.5 percent. What is the arbitrage-free value of the bond()
A. $975.84.
B. $1094. 87.
C. $962.38.