Basic bond valuation Complex Systems has an outstanding issue of $$1,000-$par$-$value bonds with a $11\%$ coupon interest rate. The issue pays interest annually and has $12$ years remaining to its maturity date.

a$.$ If bonds of similar risk are currently earning a rate of return of $9\%,$ 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 is $11\%$ instead, what would the current value of Complex Systems' bond be$?$ Contrast this finding with your findings in part a and discuss.

a$.$ If bonds of similar risk are currently earning a rate of return of $9\%,$ the Complex Systems bond should sell today for $$.($Round to the nearest cent.$)$

b$.$ Describe the two possible reasons why the rate on similar$-$risk bonds is below the coupon interest rate on the Complex Systems bond. $($Select the best answer below.$)$

A$.$ Since Complex Systems' bonds were issued, there may have been a shift in the supply$-$demand relationship for money or a change in the risk towards the firm.

B$.$ Since Complex Systems' bonds were issued, there may have been a change in the number of bonds available or a change in the coupon interest rate.

C$.$ Since Complex Systems' bonds were issued, there may have been a shift in the supply$-$demand relationship for their product or a change in the risk towards loans.

D$.$ Since Complex Systems' bonds were issued, there may have been a change in the supply$-$demand relationship for money or a shift in the investors' attitudes towards the firm.

c$.$ If the required return were at $11\%$ instead of $9\%,$ the current value of Complex Systems' bond would be $$.($Round to the nearest cent.$)$

When the required return is equal to the coupon rate, the bond value is

the par value. In contrast in part a above, if the required return is less than the coupon rate, the bond will sell at a

$($its value will be greater than par$).($Select the

best answers from the drop$-$down menus.$)$