Posted by & filed under Intro to Personal Finance (Grable & Palmer).

This 12:10 seconds YouTube video talks about the features of an I Bond and how an investor can successfully add it to their financial portfolio. It gives students further options discussed in LO # 7.3 in the Grable text


Multiple Choice Questions

  1. What is a hurdle rate when it comes to holding a bond?
  • The hurdles one goes through when purchasing a bond
  • The hurdle rate refers to the rate earned on a bond when factoring in inflation and fees paid to the financial advisor
  • The hurdle rate refers to the after-tax rate earned on a bond
  • The hurdle rate refers to the rate earned on a bond before inflation
  1. An I Bond is a
  • Inflation adjusted bond
  • Interest bearing bond
  • Issued by the US Treasury
  • All the above
  1. Which of the following statement is false when it comes to the I Bond?
  • It has a fixed rate element only
  • It has a fixed rate and inflation rate element
  • This bond has no interest rate risk
  • The current rate applies to the first 6 months
  1. When it comes to the fixed rate element of the I Bond which statement is true?
  • The fixed rate element changes every 6 months
  • The fixed rate element is adjusted to inflation
  • The fixed rate element does not change
  • The fixed rate element is currently .25%
  1. Which is the easiest way to purchase an I Bond?
  • Purchase it from your bank
  • Purchase it from TreasuryDirect. Gov
  • Purchase it from your trusted financial advisor
  • Purchase it from any e trade website
  1. Paper I Bonds are sold in all the following denominations except one. Which one is not one of the denominations?
  • $50
  • $600
  • $100
  • $500
  1. Which one of the following statements is FALSE when it comes to taxation of, I Bonds?
  • Interest accumulates within the I Bonds
  • Interest is federally taxed not state or locally
  • Interest can be paid yearly or when the bond is redeemed
  • Interest is paid on the state and local level but not federally
  1. When cashing in an electronic I Bond
  • It must be done with a minimum amount of $25 and must be in 1 cent increments
  • One must leave at least $50 in the account
  • One must collect the entire interest even when partially redeeming the bond


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