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A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Johnson Incorporated 6% Smith, LLC 12% Irwin Corporation 9% Each
A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company 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. BOND VALUE ($1 1200 A 1100 B 1000 900 C 800 700 600 10 8 6 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. All of the bonds will have the same value when they reach maturity. The expected capital gains yield for Johnson Incorporated's bonds is positive. Irwin Corporation's bonds are a better investment than Smith, LLC's bonds. OSmith, LLC's bonds are a better investment than Johnson Incorporated's bonds. Irwin Corporation's bonds have exhibited a substantial trading volume in the past few years. Its bonds would be referred to as a
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