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Portfolios 410: Bonds and Money Market Investments

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1.
Most municipal bonds are free of _______ on distributions of interest.
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Federal tax. They are also free of state and local taxes in the states in which they are issued. However, if you own one from one state but you live in another, you will owe state and/or local taxes on it.
2.
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.
3.
Which money market investment is used to pay for imports or exports?
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Banker's acceptance. This is used by banks to finance imports and exports.
4.
Agencies of the US government sell their own bonds.
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True. To finance their activities, they sell bonds to the public.
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.
You can buy series EE savings bonds only through TreasuryDirect.
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True. TreasuryDirect is now the only way to buy them.