Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

Start a Study Session Sign up for Question of the Day
The state of Massachusetts has issued a general obligation (G.O.) bond that pays 3% interest. As an agent selling this bond, you can legitimately tell the investor that
  1. the bond is guaranteed by the state of Massachusetts and is, therefore, a risk-free investment.
  2. the interest income the investor receives from the bond will be free from federal taxation.
  3. all state general obligation bonds are also guaranteed by the federal government.
  4. all of the above statements are true.
Explanation
Answer: B - An agent selling a Massachusetts general obligation bond can legitimately tell the investor that the interest income he receives from the bond will be free from federal taxation. It is not, however, a risk-free investment. States may default on their bond issues, and bonds issued by states are not guaranteed by the federal government.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz