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A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Johnson Incorporated Smith, LLC 6% 12% Irwin Corporation 9% Each
A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Johnson Incorporated Smith, LLC 6% 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 1100 B 1000 900 800 700 600 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. O The current yield for Smith, LLC's bonds is greater than 9%. The current yield for Smith, LLC's bonds is between 0% and 9%. O Smith, LLC's bonds have the highest expected total return. Irwin Corporation's bonds are selling at par. 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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