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Bonds 103: Buying Bonds

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1.
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.
2.
The more bonds you buy in one sale, the less you will pay in markup costs.
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True. Markups are generally lower for large sales than for small ones.
3.
The highest credit rating a bond can receive is _______.
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AAA. AAA is the highest credit mark a bond can receive.
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.
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.