Will a bond that allows the borrower to repay the loan early have a higher or a
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Question:
- Will a bond that allows the borrower to repay the loan early have a higher or a lower promised interest rate than an identical bond that does not allow early repayment? Why?
- Explain the mechanics of a credit default swap.
- Using information from a current newspaper or the internet, what is the annualized yield on corporate bonds (high-quality, medium-quality, high-yield) today?
- Does a higher reward (expected rate of return) always come with more risk?
- Would a single individual be effectively more, equally, or less risk-averse than a pool of such investors?
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