Discuss default risk as it relates to bonds. How may investors use risk ratings? What is the relationship between the risk rating and the risk premium? How do economic conditions affect default risk?
Answer to relevant QuestionsWhat is the risk to investors on bonds that have a call feature? Describe the maturity matching strategy of investing in bonds. Give an example. Why is this strategy considered conservative? Discuss how bonds are sold on the secondary market. Paul has $ 10,000 that he wishes to invest in bonds. He can purchase Treasury bonds with a coupon rate of 7% or municipal bonds with a coupon rate of 5.5%. Paul lives in a state with no state income tax and has a marginal ...If the Sampsons should purchase bonds, what maturities should they consider, keeping in mind their investment goal?
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