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FINRA Series 6

Category - Series 6

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Which of the following is true about treasury bonds?

have no default risk.
have no interest-rate risk.
have no prepayment risk.
are totally risk-free.

Explanation

Answer: A - Treasury bonds have no default risk. They do have interest-rate risk; their prices will fall with increases in interest rates, just like any other bond. Some Treasury bonds are callable, in which case the investor is exposed to prepayment risk.

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FINRA Series 6

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