Assets, Incorporated, plans to issue $$4$ million of bonds with a coupon rate of $7\mathrm{.}2$ percent, a par value of $$1,000,$ semiannual coupons, and $25$ years to maturity. The current market interest rate on these bonds is $6\mathrm{.}7$ 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 today? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$

If the bonds are callable one year from today at $$1,040,$ will their price be greater or less than the price you computed in part $($a$)?$

multiple choice

Lesser

Greater