In chapter 6, Bond Valuations techniques are introduced A bond is a debt security, like IOU. The bond issuers borrow from the Bond Investors. The issuers agree to repay the principal amount of the loan on the maturity date. Thus, a bond represents loans from the holder to the issuer. In this assignment, you are to discuss the following with numerical examples:

1. What are the determinants of the shape of the yield curve
2. What does it mean when a bond sells at a premium or when it sells at a discount?
3. Discuss the relation between a corporate bonds expected return and the yield to maturity; define default risk and explain how these rates incorporate default risk.
4. Assess the creditworthiness of a corporate bond using its bond rating; define default risk.