1. What is the difference between the following? a) The indenture and the trustee b) The coupon rate and the current rate of interest c) Debentures and secured bonds d) A sinking fund and a call feature e) Mortgage bonds and equipment trust certificates f) Serial bonds and term bonds g) Zero coupon and coupon bonds h) High-yield and investment-grade bonds 2. What is the relationship between interest rates and the length of time to maturity? Figures 13.1 through 13.3 give various yield curves for U.S. Treasury securities. What is the current yield curve for U.S. Treasury securities? Possible sources for the answer to this question are Bloomberg (www.bloomberg.com under Market Data: Rates & Bonds) or the Treasury Direct (www.treasurydirect.gov under the section on access data). 3. Even though bonds are debt obligations, investing in them involves risk. What are the sources of risk? What role do rating services play in managing risk? 4. How do you purchase a publicly traded bond?

Textbook

Mayo, H. B. (2008). Investments: An introduction (11th ed.). Mason, OH: South-Western, Cengage Learning. Chapter 13, Pages 435 thru 471