(answered) 1 After a cursory review of the yields does

anything

1. After a cursory review of the yields, does anything stand out that should cause Jinnie to
worry?

2. In terms of bond maturity dates, what should an investor expe

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does-anything

1. After a cursory review of the yields, does anything stand out that should cause Jinnie to
worry?

2. In terms of bond maturity dates, what should an investor expect? What is happening in this
example?

3. In terms of Standard & Poor's ratings, do you think that the differences in yields are
reasonable? (Be sure to also consider time remaining to maturity.)

4. Using your responses from Questions 2 and 3, is Jinnie being adequately compensated for
the risk she is taking?

5. What is the minimum interest rate differential that Jinnie should expect between an AAA-rated
bond and a BBB-rated bond? Is this the case in the example?

6. If interest rates were to increase by 1 percent or 2 percent, which of the bonds would be the
least affected? Which one would be the most affected? Why?

7. If Jinnie asked for a recommendation on which bonds to sell and which to buy more of, what
would you recommend? If she purchases more of one particular issue, even if it offers the best
risk-adjusted return, to what other types of risks could Jinnie be exposed?

8. Since Jinnie does not plan to use these funds for many years, would Series EE savings
bonds or Series I bonds offer any advantage as an investment alternative?

9. If another investor were to purchase one XYX Industries bond (par value of $1,000) at a price
of $945, how much in annual interest would be earned?

10. Use the information from Question 9 to determine the new investor's approximate yield to
maturity for the XYX Industries bond.

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 About 6 months ago, Jinnie inherited a portfolio that included a number of bonds. Jinnie knows
very little about investing in general and practically nothing about bonds specifically. She put
together the following chart for your review. All Jinnie knows for sure is that she now owns
seven bonds, ranging in maturity from 3 to 20 years. The following chart includes each bond, its
Standard & Poor's rating, its maturity, and its current yield.

1 After a cursory review of the yields does anything

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does-anything

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