ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Is a risk management account
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Funds deposited are tax deductible
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Payments are directly deposited in the qualified savings account
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Carry higher than market interest rates
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Detailed explanation-1: -Some government bonds tied to inflation have started paying higher rates to account for increasing costs. Government-issued Series I bonds purchased between November 2022 and April 2023 will pay interest at an annual rate of 6.89 percent, according to TreasuryDirect.
Detailed explanation-2: -A fundamental principle of bond investing is that market interest rates and bond prices generally move in opposite directions. When market interest rates rise, prices of fixed-rate bonds fall. this phenomenon is known as interest rate risk.
Detailed explanation-3: -non-investment grade bonds, which are also called high-yield or specula-tive bonds, generally offer higher interest rates to com-pensate investors for greater risk. Bonds also differ according to the type of interest pay-ments they offer.
Detailed explanation-4: -Answer and Explanation: The answer is d. A 10-year bond with a zero-coupon. Interest rate risk refers to the variability of bond prices as a result of changes in interest rates.