Financial Instruments

Financial Instruments 
Financial Questions please give brief explanation to 1 2 4 Do you agree or disagree with 3 briefly explain why or why not  3 to 4 sentences for each
 
 
1. Unlike default-free bonds like those from the US Treasury, corporations 
may default on their bonds, which affects the expected return and could raise the red flag for potential investors. How do you think this can be fixed?
 
2. A bond- price and its yield to maturity are basically one in the same.  A bond- yield to maturity is the discount rate that sets the present value of the promised bond payments equal to the current market price of the bond.  The yield to maturity is independent of the face value of the bond.  As a bond approaches maturity, the price of the bond approaches its face value.
 
3. The trade off between dividends and growth is that increasing the firm's
growth can require investment, and money spent on investment cannot 
also be used to pay dividends. How can this be resolved by large companies?
 
4. The dividend discount model is based on the idea that that a stock's price should be equal to the sum of its current and future cash flows, after taking the time value of money into account.  You would really need to understand the above in order to effectively use the DDM.  The basic model is simple to use which makes it attractive and used often. You take the price of the dividend that was paid and divide that by an expected rate of return.  For someone like me that does not fully understand what dividends me, this model would be something to use to help me figure it out, which is an advantage for investors.  Most investors just want to focus on the investing without a lot of calculations.  What do you think?