Use the chart below to recommend bonds to the investors:
Type of Bond
Corporate
Terms
1 to 100 years
Risk
Low to high
Interest
Highest,
linked to risk
Tax
Implications
Taxable
Municipal
1 to 50 years
Variable
Low, but
linked to risk
Tax-exempt
Agency
1 to 20 years
Low to very
safe
Medium
Some tax-exempt
Treasury notes
Treasury bills
2, 5, & 10
years
4, 13, & 26
weeks
Very safe
Low
Federally taxable
only
Very safe
Low
Federally taxable
only
1. Mr. Davis is an investor who needs a very safe investment since he will retire in
two years. Which bond/ bonds should he consider? Why?
2. Ms Jones is a young investor. She is willing to take the most risk that bonds have
to offer. Which bonds should she consider? Why?
3. Mr. and Mrs. Peters want a tax exempt investment. Which type of bonds should
they consider? Why?
4. Mr. Fredrick wants a short term bond. Which bond should he consider? Why?
