6. Bond yields and prices over time A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Irwin, LLC 6% Johnson Corporation 12% Smith Incorporated 9% Each bond has 10 years until maturity and the same level of risk. Their vield to matunty (VTM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUES 1200 1100 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 IS 1200 1100 1000 900 800 200 600 B C 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. Irwin, LLC's bonds have the highest expected total return. The bonds have the same expected total return. The expected capital gains yield for Johnson Corporation's bonds is greater than 12% 4 The expected capital gains vield for Johnson Corporation's bonds is negative. Irwin, LLC just registered and issued its bonds, which will be sold in the bond market for the first time Irwin, LLC's bonds would be referred to Grade