Future Business Leaders of America (FBLA) Securities and Investments Practice Test

What is a primary characteristic of Series HH bonds?

1. Issued at a discount

2. Purchased at par

3. Issued by municipalities

4. Have variable interest rates

The correct answer is: Purchased at par

Series HH bonds are unique in that they are purchased at par, meaning they are sold at their face value. This characteristic distinguishes them from certain other types of savings bonds that might be issued at a discount to their face value. When investors buy Series HH bonds, they pay the full face value upfront, which is typically a set denomination such as $500 or $1,000. Unlike bonds that are issued at a discount, Series HH bonds do not accumulate interest upfront and then reach maturity values higher than the initial purchase price. Instead, they provide fixed interest payments over their lifespan. Additionally, Series HH bonds are backed by the full faith and credit of the U.S. government, making them a reliable investment for those seeking to receive stable, periodic interest income. This focus on being purchased at par sets Series HH bonds apart from investment vehicles that offer returns based on fluctuating market conditions or those that leverage municipal financing for project funding.