Investment VehiclesPregunta 92 de 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

Explicación

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.

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