How do the earnings on Series EE, I, and HH bonds differ?
Earnings on Series EE and I bonds are available when the bonds are cashed; they pay no periodic interest. Series HH bonds pay semi-annual interest directly to the bondholder. Series HH bonds, which can only be purchased through the exchange of Series EE bonds, defer federal income tax on EE bond earnings for up to 20 more years. Note: New sales of HH bonds were discontinued by the U.S. Treasury, effective September 1, 2004. 9.Define interest rate risk and call risk. What risks do they represent for the bond investor? Interest rate risk refers to the risk of the price of a bond falling in response to newly issued bonds that are paying a higher rate of return. In other words, the bondholder would be forced to sell the bond at a discount, or lower than face amount, to compensate a new purchaser for buying a bond paying a lower than currently available rate. (The inverse relationship would also increase the market price of a bond, should rates in the market be lower than the rate paid on t
