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13. As part of your analysis of debt issued by Monticello Corporation, you are asked to evaluate two of its bond issues, shown in the following table. Bond A (Callable) Bond B (Noncallable) Maturity 2027 2027 Coupon 11.50% 7.25% Current price 125.75 100.00 Yield to maturity 7.70% 7.25% Modified duration to maturity 6.20 6.80 Call date 2021 - Call price 105 Yield to call 5.10% Modified duration to call 3.10 a. Using the duration and yield information in the table above, compare the price and yield behavior of the two bonds under each of the following two scenarios: i. Strong economic recovery with rising inflation expectations. ii. Economic recession with reduced inflation expectations. b. Using the information in the table, calculate the projected price change for bond B if its yield to maturity falls by 75 basis points. c. Describe the shortcoming of analyzing bond A strictly to call or to maturity. 13. As part of your analysis of debt issued by Monticello Corporation, you are asked to evaluate two of its bond issues, shown in the following table. Bond A (Callable) Bond B (Noncallable) Maturity 2027 2027 Coupon 11.50% 7.25% Current price 125.75 100.00 Yield to maturity 7.70% 7.25% Modified duration to maturity 6.20 6.80 Call date 2021 - Call price 105 Yield to call 5.10% Modified duration to call 3.10 a. Using the duration and yield information in the table above, compare the price and yield behavior of the two bonds under each of the following two scenarios: i. Strong economic recovery with rising inflation expectations. ii. Economic recession with reduced inflation expectations. b. Using the information in the table, calculate the projected price change for bond B if its yield to maturity falls by 75 basis points. c. Describe the shortcoming of analyzing bond A strictly to call or to maturity

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