Understanding Bonds

What is the primary role of a bond buyer?

• To borrow money from a bank

• To lend money to the bond issuer

• To manage government projects

• To issue new stocks

Why might a government choose to issue bonds?

• To increase stock prices

• To avoid paying taxes

• To fund public projects like roads and schools

• To reduce interest rates

Which type of bond is considered extremely safe due to government backing?

• US Treasury bonds

• Junk bonds

• Municipal bonds

• Corporate bonds

How can an investor profit from bonds if market interest rates fall?

• By converting bonds into stocks

• By buying more bonds

• By selling the bond at a higher price

• By holding the bond until maturity

What is a potential risk of investing in bonds?

• The bond might lose its tax-free status

• The bond might convert into stock

• The issuer might default on payments

• The bond might increase in value