DQ

Draft a response to each of the bulleted questions below. Each question must have its own response and have a minimum of 50 words.

1.       Explain the difference between Bond Yield (Yield to Maturity) and Coupon Interest Rate. Also, what factors determine a bond's rating and why is the rating important from manager and investor's perspectives?

2.        Explain why high-income and wealthy people are more likely to buy a municipal bond than a corporate bond.

3.       All else equal, which bond’s price is more affected by a change in interest rates, a short-term bond or a longer-term bond? Why?

4.       Briefly explain the historical return, risk, and risk-return relationship of the stock, bond, and cash markets.

5.       How do you feel about risk? Are you a risk-taker? How much do you tolerate risk for your investment?

6.      Describe the process for using the P/E ratio to estimate a future stock price.

7.      Differentiate the characteristics of growth stocks and value stocks.

8.       Explain what the efficient frontier is and why it is important to investors.