Question 1. Difference between the current yields on different bonds can be explained by their relative riskiness and different terms to maturity. Discuss.
Question 2. Although the market price of long term bond is much more sensitive to changes in market interest rate than the market price of short term bonds, it is not obvious that an individual wishing to invest for a fixed period should choose to invest in a series of shorter-terms bonds. Discuss the rationale for this statement.