Income Beginner: Buying Bonds

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1.
The price you pay for a new bond issue is called its _______.
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Offering price. Markups and commissions are fees you pay to dealers and brokers, respectively.
2.
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.
3.
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.
4.
New US Treasury bonds are offered only four times a year.
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True. You can only buy bonds directly from the Federal Reserve during the first half of February, May, August, and November.
5.
If a bond cannot be redeemed until its maturity date, it is considered to be callable.
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False. Bonds that can be paid back before their maturity date are callable.