1. List the differences between a bond, common stock and preferred stock. 2. What assumptions are made when valuing stocks? Why are such assumptions made? Which of these assumptions do you find most plausible? 3. Why is the preferred stock method of financing unpopular? 4. Under what conditions can the promised return on a bond be realized at the time of when it is purchased? 5. What is the difference between the coupon rate and the rate of return on a bond? 6. What is a convertible bond? 7. Is it true that a Government of Canada security is risk-free? 8. Which ofthe following bonds has the highest interest rate risk? A Government of Canada bond maturing in 30 years or a BB-rated a BB-rated corporate bond maturing in 30 years? 9. Some companies pay often substantial amounts of money to rating firms such as the Dominion Bond Rating such as the Dominion Bond Rating Service to have their securities rated. However, they are not obligated to do so, which is strictly voluntary. So why do you think theydo it? 10. Let's say you buy a bond today with an 8% coupon and a 20-year maturity when it was issued. If interest rates suddenly drop to 3%, what happens to the value of your bond? Justify your