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1. Which of the following statements regarding the U.S. government bonds are correct: I. pay interest that is exempt from federal income taxes II. are

1. Which of the following statements regarding the U.S. government bonds are correct:

I. pay interest that is exempt from federal income taxes

II. are considered to be free of interest rate risk

III. are considered to be free of default risk

IV. generally have lower coupons than those issued by an individual state

Group of answer choices

A. I and III only

b. III and IV only

c. II and III only

d. I, II, III and IV

e. III only

2. The 10-year semi-annual coupon bond is selling at par and has an effective annual yield of 8.50 percent. What is the amount of each interest payment if the face value of the bonds is $1,000?

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