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Income Beginner:
Introduction to Government Bonds
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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1.
Which of the following agencies does not issue mortgage-backed securities?
Choose wisely. There is only one correct answer.
Fannie Mae
The US Post Office
Freddie Mac
The US Post Office. The others were created for mortgage purposes.
2.
Why were collateralized mortgage obligations introduced to the market?
Choose wisely. There is only one correct answer.
To compete with stocks
To create collateral for government bonds
To keep mortgage bond yields above the rate of inflation
To reduce the prepayment risks that arise from refinanced mortgages
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 _______.
Choose wisely. There is only one correct answer.
They are not part of the private sector
Many of them have long maturities
They are backed by the credit of the US government
All of the above
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.
Treasury bonds are sometimes sold through auctions.
Choose wisely. There is only one correct answer.
True
False
True. When this happens, their interest rates may change from the original amounts.
5.
On _______bonds, the owner can defer taxes on interest until the bond is redeemed.
Choose wisely. There is only one correct answer.
Series EE
Series HH
Treasury
Series EE. The owner can pay taxes annually or defer taxes on interest until the bond is redeemed.
6.
Treasury note maturities can last as long as ________ years.
Choose wisely. There is only one correct answer.
Five
Ten
Thirty
Forty
Ten. Ten years is the maximum maturity.
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DONE