Explain the basics facts of bonds; how they are priced, their yields etc.

Instructions attached 1. The primary and significant interest rates that you should be concerned about as an investor are the following. Define them and quote their latest price and as of date. a. Prime rate b. Discount rate c. Federal funds rate d. Call money rate. 2. Bonds – Explain the basics facts of bonds; how they are priced, their yields etc. . . 3. Yield to Maturity “Yield to Maturity” is a critical concept that is important when considering individual bonds as an investment. Many times, investors do not buy a bond on its initial offering but buy them after they have been out for several years, what we call the aftermarket. In addition, how much is your bond worth 2 or 5 years after you bought it but before it matures? What happens if you need the money from your bond for an emergency? What is it worth? Research your resources and find out about: a) “yield to maturity” b) buying bonds at a discount – how does that happen? Important!! – Give me an example of how you can lose money buying a low interest bearing bond and then having to sell it before it matures? -Show numbers in your example.. . 4. Investing in Fixed Income Securities Your parents have expressed an interest in Fixed Income Securities, including STRIPS. -Explain Fixed Income Securities and STRIPS and how they can be a good part of their balanced portfolio. -Then, pick a short term (less than 5 years), intermediate (5-10 years) and long term (10+ years) fixed income security for their portfolio. Include all pertinent info (days to maturity, bid, ask, etc) as well as a summadfpry of why you are recommending each one.