For investors living in the issuing state, a positive aspect of municipal bonds is that
A)the interest they earn is taxed deferred until the bonds are sold.
B)they are considered tax-deductible losses.
C)they have zero tractability.
D)the interest they earn is exempt from federal and state income taxes.

Question

Quizplus · Accepted Answer

Municipal bonds offer tax advantages for investors, particularly those living in the issuing state. The interest earned on municipal bonds is generally exempt from federal and state income taxes, which means that investors can earn a higher after-tax return compared to other types of bonds. This tax exemption also applies to investors living in the issuing state, making municipal bonds an attractive investment option for local investors.

For Investors Living in the Issuing State, a Positive Aspect