Income Beginner: Bonds and Money Market Investments

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1.
One advantage of savings bonds is _______.
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The small minimum purchase required. You can buy savings bonds in amounts as low as $25.
2.
What is the actual price of a government bond quoted at 92.4?
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$921.25. Government bonds are quoted as parts of $100. The 92 means $920. Amounts less than 1 are quoted in 32nds. Thus, the .4 in the quote means 4/32, which is $1.25. The quote works out to $920 + $1.25 = $921.25.
3.
When a bond is called back by the company, it is done so at the _______.
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Call price. This is the price at which it the holder must redeem the bond.
4.
Generally, the longer the maturity on a CD, the higher the interest rate.
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True. High interest rates are a way of rewarding investors for leaving their money invested for long periods.
5.
Most municipal bonds are free of _______ on distributions of interest.
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Federal tax. They are also free of state and local taxes in the states in which they are issued. However, if you own one from one state but you live in another, you will owe state and/or local taxes on it.
6.
Which money market investment is used to pay for imports or exports?
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Banker's acceptance. This is used by banks to finance imports and exports.