Issuing Company: Annual Coupon Rate:
Johnson Enterprises 6%
Smith Inc. 12%
Irwin Metalworks 9%
Each bond has 10 years until maturity and has the same risk. Their yield to maturity (YTM) is 9%. Interest rates are assumed to remain constant over the next 10 years.
1. Based on the preceding information, which of the following statements are true? Check all that apply.
a. The expected capital gains yield for Jonhson's bonds is positive.
b. Irwin's bonds are a better investment than Smith's bonds.
c. All of the bonds will have the same value when they reach maturity.
d. Smith's bonds are a better investment than Johnson's bonds.
2. Irwin's bonds have exhibited a substantial trading volume in the past few years. Its bonds would be referred to as a (Seasoned Issue or New Issue).