Income Beginner: Introduction to Government Bonds

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1.
Treasury bonds are sometimes sold through auctions.
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True. When this happens, their interest rates may change from the original amounts.
2.
Why do US government agencies sell bonds?
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To raise money for their operations. Agencies need this money to do their work for the public.
3.
What is used for collateral for collateralized mortgage obligations?
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Pools of mortgages. These pools back CMOs in the event of default.
4.
Treasury notes are sold through auctions.
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True. They are sold this way, using bids.
5.
On _______bonds, the owner can defer taxes on interest until the bond is redeemed.
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Series EE. The owner can pay taxes annually or defer taxes on interest until the bond is redeemed.
6.
Many investors consider government bonds the safest of all bonds because _______.
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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.