1. In what ways is preferred stock similar to long-term debt? In what ways is it similar to common stock?
2. Explain why bondholders often prefer a sinking fund provision in a bond issue.
3. Explain what is meant by interest rate risk.
4. Explain how a bond can be classified as a fixed-income security when the yield to maturity can fluctuate significantly over time, depending on the market price of the bond.