Investment VehiclesQuestion 92 of 100

Compared with corporate bonds, municipal bonds of similar credit quality typically offer:

a.Lower nominal yields, offset by federal tax-exempt interest
b.Higher nominal yields with taxable interest
c.Guaranteed federal insurance
d.No credit risk at all

Explanation

Municipal bonds usually carry lower nominal yields than comparable corporates because their interest is generally exempt from federal income tax, raising the after-tax yield for taxable investors. They still carry credit and interest-rate risk. Taxable-equivalent yield comparisons are essential.

Practice all 100 questions free — no signup required.

Related questions on this topic

Last reviewed: · editorial process

PrepPass Editorial Team · Verified against NASAA Series 66 Uniform Combined State Law Exam · How we review
Report