1. Consider a bond with a 4.5% coupon and a 6.0% YTM. If the bonds YTM remains constant, then in one year, will the bond price be higher, lower, or the same?

2. Assume an investor is purchasing a U.S. Treasury bond on October 15. The face value is $1 million and the bond matures in 20 years. The coupon is 3.0%. Todays bond price is 120:08+. What is the market value of the bond?

3. What is dirty price of the bond described in question 7?

4. List the credit ratings that are offered by Standard & Poors.

5. What is the highest credit rating in Standard & Poors speculative-grade category?

6. How would you describe a Standard & Poors credit rating of D?

7. If a corporation misses a scheduled interest payment, they have suffered a debt-service default. However, corporations can also experience a technical default. How does this differ from missing the interest payment?

8. When credit rating agencies assign a credit rating, they typically also offer an outlook. Offer an example and very briefly describe the significance of the outlook.