Question

In 2000, Dorothy bought Series EE U.S. savings bonds with face values of $2,500 for each of her three grandchildren born in 2000: Josh, Ethan, and Brooklynn. The bonds purchased that year had a 17-year maturity rate. In 2017, each of the grandchildren cashed the bonds for college tuition down payments. Which of the following statements is true?

a) The bonds had reached their maturity in 2017.

b) The grandchildren received the face value of the bonds when cashing them.

c) The maturity rate of the bonds was 20 years.

d) Dorothy purchased the bonds in 2017.

Answer 1

The bonds had reached their maturity in 2017, but the grandchildren did not receive the face value of the bonds when cashing them.

Step-by-step explanation:

To determine whether Dorothy's bonds had reached their maturity in 2017, we need to consider the maturity rate of the bonds. Since Dorothy purchased the bonds in 2000 with a 17-year maturity rate, the bonds would reach their maturity in 2017.

Therefore, option a) The bonds had reached their maturity in 2017 is true.

However, it is important to note that the grandchildren did not receive the face value of the bonds when cashing them. The value of the bonds at redemption would be dependent on the interest earned over the 17-year period.

Therefore, option b) The grandchildren received the face value of the bonds when cashing them is false.

Lastly, option c) The maturity rate of the bonds was 20 years is also false because the bonds had a maturity rate of 17 years, not 20 years.

Option d) Dorothy purchased the bonds in 2017 is also false because Dorothy purchased the bonds in 2000.