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Bonds 108: Introduction to Government Bonds

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1.
Why were collateralized mortgage obligations introduced to the market?
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To reduce the prepayment risks that arise from refinanced mortgages. Investors can reduce their risks by choosing different maturities to invest in.
2.
What is the range of maturities of agency bonds?
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One to fifty years. Agency bonds have a very wide range.
3.
Series Electronic EE savings bonds are bought at one half their face value.
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False. They are bought at their full face amounts. Paper EE bonds were bought at one half their face value, but they are no longer offered.
4.
How often do Treasury bonds pay interest?
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Semi-annually. They pay interest twice per year.
5.
Many investors consider government bonds the safest of all bonds because _______.
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They are backed by the credit of the US government. The US government is considered to have the best ability to repay bonds and bond interest.
6.
Treasury note maturities can last as long as ________ years.
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Ten. Ten years is the maximum maturity.