QUESTION 7

1. Carson lives in North Carolina and has purchased a bond issued by the state of Pennsylvania. Which of the following best describes the tax impact for Carson?

   		a. The bond interest will be taxed at the federal level and will be taxed by the state of PA.
   		b. The bond interest will not be taxed at the federal or state level.
   		c. The bond interest will be tax free at the federal level and will be taxed by the state of NC.
   		d. The bond interest will be federally tax free and will be taxed by the state of PA.

QUESTION 8

1. All of the following statements regarding U.S. Treasury securities are correct EXCEPT:

   		a. Treasury securities are issued in an auction format.
   		b. It is possible to buy a fraction of a Treasury bond because the minimum investment is only $100.
   		c. Individual investors cannot purchase treasury issues directly from the Treasury Department.
   		d. The same yield is paid by all investors.