Question
A bond investor is analyzing the following annual coupon bonds: Issuing Company Annual Coupon Rate Irwin, LLC 6% Johnson Corporation 12% Smith Incorporated 9% Each
A bond investor is analyzing the following annual coupon bonds:
Issuing Company | Annual Coupon Rate |
---|---|
Irwin, LLC | 6% |
Johnson Corporation | 12% |
Smith Incorporated | 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 | |
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 Corporations bonds is between 0% and 9%.
Johnson Corporations bonds have the highest expected total return.
The current yield for Johnson Corporations bonds is greater than 9%.
Smith Incorporateds bonds are selling at par.
Smith Incorporateds bonds have exhibited a substantial trading volume in the past few years. Its bonds would be referred to as a .
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