Directions: Using Microsoft® Word to save and submit your work, please provide detailed and elaborate responses to the following questions. Your responses should include examples from the reading assignments.
- How do interest rates in the economy affect the price of a corporate bond?
- You are trying to evaluate two bond issues.One bond issue is rated “A” by Moody’s; the other is rated “B.” How important are the bond ratings issued by Moody’s Investors Service? Based on your feedback, would you purchase the “A” bond or the “B” bond?
- If your primary goal is current yield, which one of these bonds is the wiser investment?Bond A: $1,000 corporate bond that pays 7 percent and has a current market value of $800; or Bond B: $1,000 corporate bond that pays 8.25 percent and has a current market value of $950?
- Why do investors purchase mutual funds instead of purchasing stocks, bonds, or other investments on their own?
- Your parents are considering the purchase of shares in a mutual fund.Discuss three advantages and three disadvantages of mutual fund investing that you believe are important for potential investors to consider.
- In what ways can a bond investor make money?
- Define five of the following six terms: (1) corporate bond (2) bond indenture (3) trustee (4) mortgage bond (5) debenture bond (6) convertible bond.
- Bonds are generally considered a relatively safe investment.How is it possible to lose money on bonds?
- What is the difference between a U.S. government Treasury bill, Treasury note, and Treasury bond?
- Corporate and Treasury bonds generally produce more interest revenue than municipal bonds.Why do investors choose to buy municipal bonds?
- Describe either the purchase options or withdrawal options that can be used to invest in or withdraw money from the investment company that sponsors an open-end mutual fund.
- Cindy and John Appleby just inherited $30,000 and would like to invest the money in a conservative mutual fund.Since they have never invested in mutual funds, they ask for your help. In your own words, describe the sources of information available for evaluating a mutual fund investment.
- Explain the difference between a load fund and a no-load fund.From a performance standpoint, is there a significant difference between mutual funds that charge commissions and those that do not?
PART II
Write a 1-page, double-spaced paper in 12 pt. font answering the following question. Please use APA format.
- You are considering purchasing shares in a mutual fund.Discuss three advantages and three disadvantages of mutual fund investing that you believe are important for potential i
