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Bonds 103: Buying Bonds

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1.
The price you pay for a new bond issue is called its _______.
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Offering price. Markups and commissions are fees you pay to dealers and brokers, respectively.
2.
Most bonds are sold through _______.
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The over-the-counter market. This market includes the NASDAQ and is the principal venue for selling bonds.
3.
Buying diversified bond mutual funds has more risk than buying a few bonds individually.
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False. Because diversified bond funds contain many different kinds of bonds, they tend to have less risk than small groups of individual bonds.
4.
The coupon rate is the amount of interest paid on a bond's premium.
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False. The coupon rate is the amount of interest paid on a bond's par.
5.
If a bond cannot be redeemed until its maturity date, it is considered to be callable.
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False. Bonds that can be paid back before their maturity date are callable.