Response to the following questions:
1. ‘Treasury securities are guaranteed by the Australian Government. Therefore, there is no risk in the ownership of such bonds.' Briefly discuss the wisdom (or folly) of this statement.
2. Select the security in the left-hand column that best fits the investor desire described in the right-hand column.
a. Five-year Treasury note i. Lock in a high-coupon yield
b. Bond with a low coupon and a long maturity ii. Accumulate capital over a long period of time
c. Yankee bond iii. Generate a monthly income
d. Non-callable bond iv. Avoid a lot of price volatility
e. Asset-backed security v. Invest in a foreign bond
f. Junk bond vi. Go for the highest yield available
vii. Go for maximum price appreciation