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

What type of bond is Series EE bonds classified as?

1. Marketable bonds

2. Non-marketable bonds

3. Convertible bonds

4. Corporate bonds

The correct answer is: Non-marketable bonds

Series EE bonds are classified as non-marketable bonds. This classification signifies that these bonds cannot be bought and sold on the open market. Instead, they are issued by the U.S. Department of the Treasury directly to individual investors. This means that the bonds cannot be transferred between investors like marketable bonds, which are actively traded on secondary markets. Non-marketable bonds, such as Series EE bonds, are typically designed for long-term savings and are often favored for their safety and fixed interest rates. They can only be redeemed by the original purchaser or their heirs, which reinforces the non-marketable characteristic. In contrast, marketable bonds can be traded freely among investors on the stock market. Convertible bonds are a specific type of corporate bond that can be exchanged for a predetermined amount of the issuing company's equity, while corporate bonds are issued by companies to raise capital and are not synonymous with the government-issued Series EE bonds. Understanding these distinctions helps clarify why Series EE bonds are specifically designated as non-marketable.