6. Bond yields and prices over time Aa Aa E A bond investor is analyzing the following annual coupon bonds: Annual Coupon Rate Issuing Company Johnson Enterprises Smith Incorporated Irwin Metalworks 6% 12% 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. Label the curves on the following graph to indicate the path that each bond's price, or value, is expected to follow. BOND VALUE ($1 1200 1100 Irwin Johnson Smith 10 8 6 4 2 0 YEARS TO MATURITY Based on the preceding information, which of the following statements are true? Check all that apply. The expected capital gains yield for Smith's bonds is greater than 12%. Johnson's bonds have the highest expected total return. The bonds have the same expected total return. The expected capital gains yield for Smith's bonds is negative. Johnson just registered and issued its bonds, which will be sold in the bond market for the first time. Johnson's bonds would be referred to as