6. Bond yields and prices over time A bond investor is analyzing the following annual coupon bonds: Issuing Company Irwin, LLC Johnson Corporation Smith Incorporated BOND VALUE [$] 1200 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. 1100 1000 900 800 700 600 10 8 B Annual Coupon Rate 6 6% 12% 9% A C 4 2 YEARS TO MATURITY 0

6. Bond yields and prices over time A bond investor is analyzing the following annual coupon bonds: Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (rTM) 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 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 current yield for Johnson Corporation's bonds is greater than 9%. The current yield for Johnson Corporation's bonds is between 0% and 9%. Johnson Corporation's bonds have the highest expected total return. Smith Incorporated's bonds are selling at par. Smith Incorporated's bonds have exhibited a substantial trading volume in the past few years. Its bonds would be referred to as