1. (a.) What is the underlying principle of valuation? (3)

(b). Why is it critical for us to learn the concept of (security) valuation? (3)

1. (a). What is a bond, who buys/sells them, and why? (2+2+2)

(b). What are the five characteristics of a typical bond? (5)

1. What cash flow(s) are expected by bondholders? Why is bond a fixed income security? (2+1)