Complex systems bond sell for today

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Basic bond valuation Complex Systems has an outstanding issue of $1,000-par-value bonds with a 13% coupon interest rate. The issue pays interest annually and has 20 years remaining to its maturity date.

a. If bonds of similar risk are currently earning a rate of return of 8%, how much should the Complex Systems bond sell for today?

b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond.

c. If the required return were at 13% instead of 8%,what would be the current value of Complex Systems' bond? Contrast this finding with your findings in part a and discuss.

What is A, B, and C?

Reference no: EM131455666

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