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Quiz: Do you know how to reap a cash crop with Treasury bonds?
by Staff
They say that time is money and that knowledge is wealth. So, whether you're a seasoned saver or just getting a plan for your future started, invest your time and test your knowledge about Treasury bonds with this quiz.

What does the credit rating of a bond issuer measure?

  • a bond issuer's total wealth
  • a bond issuer's total debt
  • a bond issuer's financial stability

What is the U.S. government's credit rating?

  • C
  • BB
  • AA+

What is a Treasury bond's primary market?

  • its primary dealers
  • its original sale at a U.S. Treasury auction
  • its highest value in one fiscal year

Which document is most similar to a Treasury bond?

  • a contract for a deed
  • an IOU
  • a lottery ticket

How are stocks different from bonds?

  • Bonds only appreciate, whereas stocks may depreciate.
  • Income from stocks is taxed at a higher rate than income from bonds.
  • Stocks give you ownership in your investment; bonds do not.

Why is a Treasury bond called a fixed-income investment?

  • It pays the same amount of interest at every pay period.
  • Its interest rate is fixed by the government.
  • It's a good choice for people on a fixed income.

What does an expense ratio compare?

  • a mutual fund's maintenance costs and its income
  • a bond issuer's income from sales and payment in interest
  • the premium and discount rates of different bonds

What's the minimum purchase allowed at a Treasury bond auction?

  • $1,000
  • $100
  • $10,000

What's the maximum noncompetitive purchase allowed at a Treasury bond auction?

  • $50,000
  • $5 million
  • $1 million

What's one advantage of having a diversified mutual fund?

  • It doesn't depend on a single sector of the economy.
  • It benefits a greater number of people.
  • It spreads the risk equally among investors.

Who first promoted the idea of "the full faith and credit" of the United States government?

  • Benjamin Franklin
  • Alexander Hamilton
  • Thomas Jefferson

What is quantitative easing?

  • slowly building a mutual fund's portfolio
  • a form of bankruptcy by a bond issuer
  • an increase in Treasury bond sales

Who decides the total value of Treasury bonds to sell at an auction?

  • Congress
  • the Federal Reserve System
  • the House Ways and Means Committee

For which goal would buying Treasury bonds be most useful?

  • funding a child's college education
  • buying a car at an end-of-the-year clearance sale
  • paying for a large wedding in two years

How are Treasury bonds different from U.S. savings bonds?

  • Treasury bonds have a later maturity date than savings bonds.
  • Minors can buy savings bonds but not Treasury bonds.
  • Savings bonds are not marketable.

Can you create your own mutual fund?

  • Yes, if you're a licensed investment adviser.
  • Yes, if you have the money to invest.
  • No, only a group of investors can create a fund.

What is a bond coupon?

  • its maturity date
  • its price
  • its interest rate

What is a call provision?

  • a bidder's right to withdraw a bid before a bond auction closes
  • an issuer's right to pay back a bond before its maturity date
  • an announcement that a bond auction is about to close

What is a put provision?

  • another name for a bid at at a bond auction
  • an issuer's right to cancel a bond sale
  • a bondholder's right to repayment in full before the maturity date

What is a broker's inventory?

  • the bonds he or she has on hand to sell
  • a network of buyers and sellers he or she regularly uses
  • bond hunters who locate bonds for a broker's clients