6. Bond yields and prices over time

A bond investor is analyzing the following annual coupon bonds:

Issuing Company	Annual Coupon Rate
Johnson Incorporated	6%
Smith, LLC	12%
Irwin Corporation	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.

Using the previous information, correctly match each curve on the graph to its corresponding issuing company. (Hint: Each curve indicates the path that each bonds price, or value, is expected to follow.)

Curve A	Smith, LLC
Curve B	Irwin Corporation
Curve C	Johnson Incorporated

Based on the preceding information, which of the following statements are true? Check all that apply.

Johnson Incorporateds bonds have the highest expected total return.

The expected capital gains yield for Smith, LLCs bonds is negative.

The bonds have the same expected total return.

The expected capital gains yield for Smith, LLCs bonds is greater than 12%.

Johnson Incorporated just registered and issued its bonds, which will be sold in the bond market for the first time. Johnson Incorporateds bonds would be referred to as .