From the information in this chapter what type of bonds will you invest in (select at least three types), business and finance homework help

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    Chapter 6
    1. In the discussion question for Chapter 4 your uncle
    gifted you $1,000,000.  Now assume you have received those funds and
    decide to invest all of the $1,000,000 into bonds.  From the information
    in this chapter what type of bonds will you invest in (select at least three
    types) and give the reasons for your selection.
    2. Assume you are trying to determine the yield to
    maturity of three different bonds.  Also assume you purchased each of the
    three bonds for $10000.  The first was a zero-coupon bond; the second was
    a bond with 2% annual coupons; and the third bond is with 8% annual
    coupons.  Each bond is for 4 years and they are all default free. 
    Discuss what formula you would use in this evaluation and some of the factors
    to be considered in making this decision.
    Chapter 7
    1. You have cashed in all of the bonds from your
    investment in Chapter 6 and now have $1,250,000 in cash.  There are two
    potential projects you are considering as new investments.  Each of these
    two projects would require one-half of your $1,250,000 at the beginning and the
    remaining amounts of your funds equally over the next two years before any
    income will be generated from either project.  You can only select one of
    the two projects.  What additional information will you need to know in
    order to apply the concepts from this chapter in your evaluation of each
    project?  Which method of evaluation will you use in your analysis of
    these two projects?
    2. You have decided to use the internal rate of return
    (IRR) approach to help you select from among the two projects under
    consideration.  Discuss the various pitfalls identified in Chapter 7
    related to use of the IRR method of evaluation.

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