2 Since bonds pay interest, does that imply the individual's risk exposure is less for investing in bonds rather than stock? 3. What are the mechanics of purchasing bonds? May the investor leave the bonds with his or her broker? 4. Since a bond has a maturity date, does that imply the investor holds the bond to maturity? 5. Can the investor expect to earn higher returns on a firm's bonds than on its stock? Arc high-yield securities an acceptable invest ment for an investment club or its members? 6. The questions obviously cover many facets to consider when investing in bonds. You believe that the presentation will be improved if you also il lustrate bond investments as part of a tax-deferred retirement account or a means to achieve diversifi- cation, so you pose these additional questions: From a tax perspective, which should an inves- tor acquire for a retirement account: a firm's stock or its bonds? 7. 8. If an individual owns stock and acquires bonds issued by the same company, does the purchase diversify the investor's portfolio? 9. How does an individual construct a diversi- fied bond portfolio? Ilow can an investor usc bonds to help diversify the total portfolio