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.
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