Problem: COmplex Systems has an outstanding issue of $1000 par-value bonds with a 12% coupon interest rate. The issue pays interest annually and has 16 years remaining to its maturity date.
a) if bonds of similar-risk are currently earning a 10% rate of return, how much should COmplex Systems bond sell for today?
b) describe two possible reasons why the rate of similar risk bonds is below the coupon interest rate on similar-risk bonds is below the coupon interest rate on the Complex System bond.
c) if the required return were 12% instead of 10%, what would the current value of Complex Systems' bond be? Contrast the findings in part a) and discuss.