1) Given your risk tolerance and your need to diversify, explain how the selected realized returns (1926–2006) page 212 and the effects of portfolio risk for average stocks will impact your future investment decisions and why
2) Assume your instructor has two bonds in his portfolio. Both have face values of $1,000 and pay a 10% annual coupon rate. Bond L (longer maturity) matures in 15 years and Bond S (shorter maturity) matures in 1 year What will the value of each bond be if the market interest rate for similar rated and maturing bonds is 5%, 8%, and 12%?
Why does the longer-term bond’s price (Bond L) vary more than the price of the shorter-term bond (Bond S) when market interest rates change?
Locate the yield curve chart in The Wall Street Journal. Describe the shape of the yield curve. Do not attach the yield curve to your posting, but simply describe its shape