character entities with Docbook Schemas..

Would I be able to use character entities (e.g.: ©, ü etc) in my
DocBook instance were I to use the DocBook XML Schemas instead of DTDs?

If yes, can someone give me a brief intro or point me to a location where I
can read up on how DocBook handles these character entities? Considering
that XML Schemas don't allow you to define character entities like in DTDs..
I'm uncertain if I lose the ability to specify char entities when going to
Schemas? (I do not want to use an internal DTD in the instance doc to
specify the entities)..

Regards.
--
Rajal