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Bonds 108: Introduction to Government Bonds

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1.
How often do Treasury bonds pay interest?
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Semi-annually. They pay interest twice per year.
2.
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.
3.
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.
4.
On _______bonds, the owner can defer taxes on interest until the bond is redeemed.
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Series EE. The owner can pay taxes annually or defer taxes on interest until the bond is redeemed.
5.
Which of the following agencies does not issue mortgage-backed securities?
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The US Post Office. The others were created for mortgage purposes.
6.
How do Treasury notes differ from Treasury bonds?
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Their maturities. Their maturities last from one to ten years, while those of Treasury bonds last longer than ten years.