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.
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.
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.
New-issue bonds are bonds that are sold through the secondary market.
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False. New-issue bonds are purchased directly from the bond issuer.
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.