Assets, Inc., plans to issue $4 million of bonds with a coupon rate of 9 percent, a par value of $1,000, semiannual coupons, and 20 years to maturity. The current market interest rate on these bonds is 11 percent. In one year, the interest rate on the bonds will be either 10 percent or 4 percent with equal probability. Assume investors are risk-neutral.

a. If the bonds are noncallable, what is the price of the Bonds:

B.

b.	If the bonds are callable one year from today at $1,100, will their price be greater or less than the price you computed in part (a)?
	multiple choice Lesser Greater