a) If a corporation's bonds are unexpectedly given a downgrade (e.g., Moody's lowers the rating on Brady Corp. Bonds to Baa from Aa), what do you expect will happen to the yield to maturity on Brady's bonds?

b) What is a call feature in a debt issuance? Is this beneficial to the corporation issuing the bond, the bond investor, or both? Explain.

c) Assuming everything else is the same, which bond would have a lower coupon rate at issuance: one with a sinking fund provision or one without a sinking fund provision? Why?

d) What is the difference between the coupon rate of a bond and the yield to maturity of a bond? Which rate is more important and why?