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1. What is the difference between the following? a) The indenture and the trustee b) The coupon rate and the current rate of interest c)
1. What is the difference between the following? a) The indenture and the trustee b) The coupon rate and the current rate of interest c) Debentures and secured bonds d) A sinking fund and a call feature g) Zero coupon and coupon bonds h) High-yield and investment-grade bonds 3. Even though bonds are debt obligations, investing in them involves risk. What are the sources of risk? What role do rating services play in managing risk? 4. How do you purchase a publicly traded bond? 5. When you purchase a bond, why do you have to pay accrued interest? 6. A call penalty protects whom from what? Why may firms choose to retire debt prior to maturity? Would you expect a callable bond to have a higher or lower coupon rate of interest than a noncallable bond
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