Bond. Savings Bond.

Select the best definition of a bond.

• A bond is ownership in a company.

• A bond is a sum of money paid regularly to its shareholders by a company.

• A bond is an FDIC insured investment account.

• A bond is a loan to the government or a company that pays investors a fixed rate of return over a specified period of time.

What does the term coupon mean (when related to bonds)?

• The timeframe of the bond

• The annual interest rate paid on a bond

• The face value of the bond

• The discounted rate of the bond when purchased

Which is the highest bond rating?

• AAA

• BBB

• CCC

• DDD

Why would someone invest in a bond with a low rating?

• Lower rated bonds typically have a higher coupon

• Lower rated bonds typically have a lower coupon

• Lower rated bonds are typically less expensive 

• Lower rated bonds are typically more expensive

What is a bond fund?

• A bond issued by a corporation to raise funds for a variety of reasons

• A bond that does not pay interest but is sold at a discount

• A mutual fund that invests in a variety of bonds

• A mutual fund that mimics a particular market index

True or False: Bonds have less risk than stocks, but more risk than a savings account

• True

• False