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Bonds 103: Buying Bonds

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1.
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.
2.
New-issue bonds are bonds that are sold through the secondary market.
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False. New-issue bonds are purchased directly from the bond issuer.
3.
US Treasury bonds bought over the counter have no transaction costs.
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False. Treasury bonds bought over the counter may have a small, additional flat fee.
4.
A discount bond _______.
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Sells below face value. When its price is below its face value, it is known as a discount bond.
5.
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.