1. Briefly explain why many corporations prefer to issue callable long-term corporate bonds rather than noncallable long-term bonds.
2. Briefly explain the idea behind an Immunized Bond Portfolio.
3. Explain why an Interest Only Strip (IO MBS) usually gains value when interest rates increase.
4. Briefly explain what happens to the price of a straight bond (no options) when the yield increases - and why.
5. Briefly describe how the Federal Reserve moves rates in the Federal Funds Market.