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Income Beginner: Buying Bonds

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1.
The coupon rate is the amount of interest paid on a bond's premium.
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False. The coupon rate is the amount of interest paid on a bond's par.
2.
US Treasury bonds bought over the counter have no transaction costs.
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False. Treasury bonds bought over the counter may have a small, additional flat fee.
3.
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.
4.
The highest credit rating a bond can receive is _______.
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AAA. AAA is the highest credit mark a bond can receive.
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.