rates? 11. An increase in interest rates will likely lead to a in business activity. Chapter 7 Bonds 1. Bonds will show up in the part of the balance sheet. 2. The 3. If the coupon rate is greater than the yield to maturity, then the bond should sell at a 4. will remain constant over the life of a fixed rate bond. pay no interest payments and sell at a large discount relative to par value. 5. When wil the call provision associated with a bond most likely be used? 6. Why do municipal bonds appeal so much to wealthy investors? 7. What are the 2 main forms of municipal bonds? Which type is considered more risky? 8. What is the expected relationship between bond prices and interest rates? 9. For the bondholder, does the existence of a sinking fund provision make a bond more risky or less risky? Why? 10. Will the coupon rate and yield to maturity ever change for a fixed rate bond? 11. What are the bond ratings associated with an investment grade rating? 12. When does a bondholder face price risk? When does he face reinvestment risk