Basic bond valuation. Complex Systems has an outstanding issue of 1,000-par-value bonds with a 16% coupon interest rate. The issue pays interest annually and has 11

years remaining to its maturity date.

a. If bonds of similar risk are currently earning a rate of return of 14%, 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 16% instead of 14%, what would the current value of Complex Systems' bond be? Contrast this finding with your findings in part a and discuss.