Explain the rationale behind why an investor might choose

Question

PART 1
1. Explain the rationale behind why an investor might choose NOT to sell bonds.

2. Discuss how interest income is usually received and the tax ramifications to an investor who receives such income in a taxable account.

3. Briefly explain what the affect of interest rate movements are on the price of corporate bonds, especially as it relates to their term to maturity.

PART 2

1. Briefly discuss how a convertible security can offer a "floor" value below which an investor can protect his investment

2. Explain why the rates offered by convertible securities are generally lower than those available on nonconvertible issues of similar quality

3. Tell how profits and losses on a preferred stock are treated

4. Discuss the major advantages of an investor who buys a "stock purchase warrant" and a nonconvertible bond

PART 2

1. Distinguish between the three types of municipal bonds presented in the introduction, and decide when investors might find these financial instruments to be a useful "tool" in their portfolios

2. Explain why a risk averse investor might prefer investing in a "general obligation' bond, rather than a "revenue bond"

3. Elaborate upon the selection process that should be considered when contemplating the direct purchase of municipal bonds

Answer 1

In a typed word paper, using Times New Roman font, you have to address the following Finance basic questions by applying the rule of APA guidelines. Q1. Describe the basis behind why an investor might select NOT to sell bonds. Q2. Illustrate how interest income is generally received and the tax ramifications to the investor who receives such income in taxable account. Q3. In brief describe what the influence of interest rate movements are on the price of corporate bonds, particularly as it associates to their term to maturity. Q4. In brief illustrate how a convertible security can offer a ‘floor’ value below that an investor can protect his investment Q5. Describe why the rates provided by convertible securities are usually lower than those available on the non-convertible issues of the similar quality. Q6. State how profits-losses on a preferred stock are treated. Q7. Illustrate main benefits of an investor who purchases a ‘stock purchase warrant’ and a non-convertible bond.