Reference no: EM13874251

PART 1
1. Explain the rationale behind why an investor might choose NOT to sell bonds.

2. Discuss how interest income is usually received and the tax ramifications to an investor who receives such income in a taxable account.

3. Briefly explain what the affect of interest rate movements are on the price of corporate bonds, especially as it relates to their term to maturity.

PART 2

1. Briefly discuss how a convertible security can offer a "floor" value below which an investor can protect his investment

2. Explain why the rates offered by convertible securities are generally lower than those available on nonconvertible issues of similar quality

3. Tell how profits and losses on a preferred stock are treated

4. Discuss the major advantages of an investor who buys a "stock purchase warrant" and a nonconvertible bond

PART 2

1. Distinguish between the three types of municipal bonds presented in the introduction, and decide when investors might find these financial instruments to be a useful "tool" in their portfolios

2. Explain why a risk averse investor might prefer investing in a "general obligation' bond, rather than a "revenue bond"

3. Elaborate upon the selection process that should be considered when contemplating the direct purchase of municipal bonds