1- Explain the meaning of the term yield to maturity.

2- Would you expect bonds that pay semi-annual coupons to sell at a higher or lower price than equivalent bonds that pay an annual coupon?

3- What is the type of bond that has no reinvestment risk? Which one has the highest price / interest rate risk?

4- Indicate if each of the following statements is true or false

a) When the bond is trading below par, the IRR is higher than the current yield.

b) If the bond is trading above par, the IRR is higher than the coupon rate and the current yield.

c) If the bond is trading at par, the IRR, the coupon rate and the current yield are equal.

5- Comment on the following statement:

"If the growth rate is highly variable, the dividend valuation model is ineffective."