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Portfolios 410: Bonds and Money Market Investments

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1.
Banker's acceptances and revenue bonds are the two types of municipal bonds.
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False. General obligation bonds and revenue bonds are the two types.
2.
A _______ is a federal government security sold in auctions and at a discount.
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Treasury bill. This is the only money market investment sold this way.
3.
You can buy a savings bond for as little as _______.
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$25. This is the minimum amount; it increases by the penny.
4.
Generally, the longer the maturity on a CD, the higher the interest rate.
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True. High interest rates are a way of rewarding investors for leaving their money invested for long periods.
5.
Zero coupon bonds do not pay periodic interest to their owners.
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True. They lack "coupons," or periodic interest payments.
6.
What is the actual price of a government bond quoted at 92.4?
Choose wisely. There is only one correct answer.
$921.25. Government bonds are quoted as parts of $100. The 92 means $920. Amounts less than 1 are quoted in 32nds. Thus, the .4 in the quote means 4/32, which is $1.25. The quote works out to $920 + $1.25 = $921.25.