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Bond yields and prices over time A bond investor is analyzing the following annual coupon bonds: Issuing Company Annual Coupon Rate Irwin, LLC 6% Johnson
Bond yields and prices over time
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. Smith Incorporateds bonds are selling at par. 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%. Irwin, LLC just registered and issued its bonds, which will be sold in the bond market for the first time. Irwin, LLCs bonds would be referred to as A new issue or an outstanding bond |
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. Smith Incorporateds bonds are selling at par. 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%. Irwin, LLC just registered and issued its bonds, which will be sold in the bond market for the first time. Irwin, LLCs bonds would be referred to as an outstanding bond |
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