Products & Their RisksQuestion 122 of 398
Interest paid on most general obligation municipal bonds is:
a.Fully taxable at the federal level but exempt from state tax
b.Exempt from federal income tax
c.Subject to federal capital gains tax as it is received
d.Taxed only if the bond is sold before maturity
Explanation
The interest (coupon) on most municipal bonds is exempt from federal income tax, which is their primary appeal. It may also be exempt from state and local tax for residents of the issuing state. Capital gains on munis, however, remain taxable.
Practice all 398 questions free — no signup required.
Related questions on this topic
- Rights of accumulation allow a mutual fund investor to:
- When a customer purchases newly issued open-end mutual fund shares, the customer must be provided:
- The taxable-equivalent yield of a municipal bond is used to:
- A 'bank-qualified' municipal bond is one that:
- A 529 college savings plan offers which key federal tax benefit?
- An ABLE account is designed primarily to:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review