Questions from General Investment

Q: Describe the process of bond portfolio immunization, and explain why an

Describe the process of bond portfolio immunization, and explain why an investor would want to immunize a portfolio. Would you consider portfolio immunization a passive investment strategy comparable...

Q: Briefly describe a bond ladder, and note how and why an

Briefly describe a bond ladder, and note how and why an investor would use this investment strategy. What is a tax swap, and why would it be used?

Q: What strategy would you expect an aggressive bond investor (someone who’s

What strategy would you expect an aggressive bond investor (someone who’s looking for capital gains) to employ?

Q: Why is interest sensitivity important to bond speculators? Does the need

Why is interest sensitivity important to bond speculators? Does the need for interest sensitivity explain why active bond traders tend to use high-grade issues? Explain.

Q: Explain why interest rates are important to bond investors. What causes

Explain why interest rates are important to bond investors. What causes interest rates to move, and how can you monitor such movements?

Q: What is the term structure of interest rates and how is it

What is the term structure of interest rates and how is it related to the yield curve? What information is required to plot a yield curve? Describe an upward-sloping yield curve and explain what it ha...

Q: You are evaluating five different investments, all of which involve an

You are evaluating five different investments, all of which involve an upfront outlay of cash. Each investment will provide a single cash payment back to you in the future. Details of each investment...

Q: How might you, as a bond investor, use information about

How might you, as a bond investor, use information about the term structure of interest rates and yield curves when making investment decisions?

Q: Explain how market yield affects the price of a bond. Could

Explain how market yield affects the price of a bond. Could you price a bond without knowing its market yield? Explain.

Q: Why are bonds generally priced using semiannual compounding? Does it make

Why are bonds generally priced using semiannual compounding? Does it make much difference if you use annual compounding?