1.

Which of the following statements is true?

a. Interest payments paid to U.S. Treasury bond holders are not taxed at the federal level.

b. Interest payments paid to municipal bond holders are not taxed at the federal level, or by the state for which the bond is issued.

c. Interest payments paid to corporate bond holders are not taxed at the federal level.

d. Interest payments paid to corporate bond holders are not taxed at the state level.

2.

Which of these statements is false?

a. Bonds are always less risky than stocks.

b. Some bonds offer high potential for rewards and, consequently, higher risk.

c. Bonds are more important capital sources than stocks for companies and governments.

d. The bond market is larger than the stock market.