Questions from General Investment

Q: Can issue characteristics (such as coupon and call features) affect

Can issue characteristics (such as coupon and call features) affect the yield and price behavior of bonds? Explain.

Q: What is the difference between a call feature and a sinking-

What is the difference between a call feature and a sinking-fund provision? Describe the three types of call features. Can a bond be freely callable but nonrefundable?

Q: Bonds are said to be quoted “as a percent of par

Bonds are said to be quoted “as a percent of par.” What does that mean? What is one point worth in the bond market?

Q: An investor recently sold some stock in a European company that was

An investor recently sold some stock in a European company that was worth 20,000 euros. The US$/€ exchange rate is currently 1.200, meaning that 1 euro buys 1.2 dollars. How many U.S. dollars will the...

Q: A local entrepreneur asks you to invest $10,000 in

A local entrepreneur asks you to invest $10,000 in a business venture. Based on your estimates, you would receive nothing for three years, at the end of year four you would receive $4,900, and at the...

Q: What are bond ratings, and how can they affect investor returns

What are bond ratings, and how can they affect investor returns? What are split ratings?

Q: From the perspective of an individual investor, what good are bond

From the perspective of an individual investor, what good are bond ratings? Do bond ratings indicate the amount of market risk embedded in a bond? Explain.

Q: Is there a single market rate of interest applicable to all segments

Is there a single market rate of interest applicable to all segments of the bond market, or is there a series of market yields? Explain and note the investment implications of such a market environmen...

Q: What is the difference between a premium bond and a discount bond

What is the difference between a premium bond and a discount bond? What three attributes are most important in determining an issue’s price volatility?

Q: What does the term duration mean to bond investors, and how

What does the term duration mean to bond investors, and how does the duration of a bond differ from its maturity? What is modified duration, and how is it used? What is effective duration, and how doe...