1) Do longer bond maturities carry higher yields if the yield curve is normal? If its inverted?

2) If a bond with a 1% coupon, face of $100 and a 5-year maturity sells for $99, what is the rate of return for an investor that buys the bond and holds it to maturity? What is the rate of return if the investor instead holds the bond for only a year and sells it for $103?

3) In terms of the business cycle what is an inverted yield curve a predictor of?

4) What is a junk bond? Would you expect it to have a higher yield than a bond that is investment grade (AAA)? Why or why not?

5) If a company is insolvent (assets are not sufficient to cover liabilities), would you prefer to be a senior creditor or a subordinated creditor? What is at stake?