Which one of the following statements concerning Treasury bonds is correct?
A) The coupon rate of a TIPS is adjusted periodically in response to changes in the rate of inflation.
B) Treasury bonds have maturity dates ranging from two to ten years.
C) Interest earned on Treasury bonds is tax-exempt at the federal level.
D) All Treasury securities are backed by the "full faith and credit" of the U.S. government.

Question

Quizplus · Accepted Answer

All Treasury securities, including Treasury bonds, are backed by the "full faith and credit" of the U.S. government. This means that the government guarantees the payment of principal and interest on the securities, making them a low-risk investment option. Option A is incorrect as it refers to TIPS, which are a specific type of Treasury security. Option B is incorrect as Treasury bonds have maturity dates ranging from ten to thirty years. Option C is incorrect as interest earned on Treasury bonds is taxable at the federal level, although it is exempt from state and local taxes.

Which One of the Following Statements Concerning Treasury Bonds Is