5. Bond yields and prices over time A bond investor is analyzing the following annual coupon bonds: Issuing Company Annual Coupon Rate Smith Corporation 6% Irwin Incorporated 12% Johnson, LLC 9% Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (YTM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUE ($1 1200 A 1100 B 1000 900 800 700 600 10 8 6 4 2 0 YEARS TO MATURITY Using the previous information, correctly match each curve on the graph to it's corresponding issuing company. (Hint: Each curve indicates the path that each bond's price, or value, is expected to follow.) Curve A Curve B Curve C Based on the preceding information, which of the following statements are true? Check all that apply. The expected capital gains yield for Irwin Incorporated's bonds is greater than 12%. The bonds have the same expected total return. Smith Corporation's bonds have the highest expected total return. The expected capital gains yield for Irwin Incorporated's bonds is negative. Smith Corporation just registered and issued its bonds, which will be sold in the bond market for the first time. Smith Corporation's bonds would be referred to as Using the previous information, correctly match each curve on the graph to it's corresponding issuing company. (Hint: Each curve indicates the path that each bond's price, or value, is expected to follow.) Curve A Curve B Curve C Irwin Incorporated Johnson, LLC Based on the which of the following statements are true? Check all that apply. Smith Corporation The expected capital gains yield for Irwin Incorporated's bonds is greater than 12%. The bonds have the same expected total return. Smith Corporation's bonds have the highest expected total return. The expected capital gains yield for Irwin Incorporated's bonds is negative. Smith Corporation just registered and issued its bonds, which will be sold in the bond market for the first time. Smith Corporation's bonds would be referred to as Using the previous information, correctly match each curve on the graph to it's corresponding issuing company. (Hint: Each curve indicates the path that each bond's price, or value, is expected to follow.) Curve A Curve B Curve C Johnson, LLC Based on the Smith Corporation which of the following statements are true? Check all that apply. Irwin Incorporated The is yield for Irwin Incorporated's bonds is greater than 12%. The bonds have the same expected total return. Smith Corporation's bonds have the highest expected total return. The expected capital gains yield for Irwin Incorporated's bonds is negative. Smith Corporation just registered and issued its bonds, which will be sold in the bond market for the first time. Smith Corporation's bonds would be referred to as Using the previous information, correctly match each curve on the graph to it's corresponding issuing company. (Hint: Each curve indicates the path that each bond's price, or value, is expected to follow.) Curve A Curve B Curved Smith Corporation Based on the which of the following statements are true? Check all that apply. Johnson, LLC O The yield for Irwin Incorporated's bonds is greater than 12%. Irwin Incorporated The Dunus Tave the same expected total return. Smith Corporation's bonds have the highest expected total return. The expected capital gains yield for Irwin Incorporated's bonds is negative. Smith Corporation just registered and issued its bonds, which will be sold in the bond market for the first time. Smith Corporation's bonds would be referred to as Using the previous information, correctly match each curve on the graph to it's corresponding issuing company. (Hint: Each curve indicates the path that each bond's price, or value, is expected to follow.) Curve A Curve B Curve C Based on the preceding information, which of the following statements are true? Check all that apply. The expected capital gains yield for Irwin Incorporated's bonds is greater than 12%. The bonds have the same expected total return. Smith Corporation's bonds have the highest expected total return. The yield for Irwin Incorporated's bonds is negative. a new issue Smith Corporat referred to as an outstanding bond issued its bonds, which will be sold in the bond market for the first time. Smith Corporation's bonds would be