As part of your analysis of debt issued by Monticello Corporation, you are asked to eval...

As part of your analysis of debt issued by Monticello Corporation, you are asked to evaluate two specific bond issues, shown in the table below.

a. Using the duration and yield information in the table, compare the price and yield behavior of the two bonds under each of the following two scenarios:

i. Strong economic recovery with rising infl ation expectations.

ii. Economic recession with reduced infl ation expectations.

b. Using the information in the table, calculate the projected price change for bond B if the yield-to-maturity for this bond falls by 75 basis points.

c. Describe the shortcoming of analyzing bond A strictly to call or to maturity.