Income Beginner: Buying Bonds

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1.
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.
2.
The face value of a bond is known as its _______.
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Par. In bond language, par means face value.
3.
The highest credit rating a bond can receive is _______.
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AAA. AAA is the highest credit mark a bond can receive.
4.
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.
5.
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.