1.How does the market determine the fair value of a bond?
2.What is the relationship between a bond's market price and its promised yield to maturity? Explain.
3.All other things held constant, how would the market price of a bond be affected if coupon interest payments were made semiannually instead of annually?
4.What is the usual pattern of cash flows for a share of preferred stock? How does the market determine the value of a share of preferred stock, given these promised cash flows?
5.Name two patterns of cash flows for a share of common stock. How does the market determine the value of the most common cash flow pattern for common stock?