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A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate 6% Issuing Company Johnson Incorporated Smith, LLC Irwin Corporation 12% 9% Each
A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate 6% Issuing Company Johnson Incorporated Smith, LLC Irwin Corporation 12% 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 BOO 700 600 10 8 4. 0 2 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 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 Smith, LLC's bonds is negative. The expected capital gains yield for Smith, LLC's bonds is greater than 12%. The bonds have the same expected total return. Johnson Incorporated's bonds have the highest expected total return. Johnson Incorporated just registered and issued its bonds, which will be sold in the bond market for the first time. Johnson Incorporated's bonds would be referred to as
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