1. Why would you want to invest in a bond over a stock? What are some of the risks associated with investing in bonds?
2. Can anyone identify the various types of bonds?
3. Assume a $1,000 Treasury bill is quoted to pay 5 percent interest over a six-month period.
a. How much interest would the investor receive?
b. What will be the price of the Treasury bill?
c. What will be the effective yield?