Investing in municipal bonds to avoid paying tax on interest earned and to earn a higher after-tax yield is an example of:

Question

Quizplus · Accepted Answer

Investing in municipal bonds and avoiding taxes on their interest earned involves conversion. This is because the investor is converting their taxable income into tax-free income. It is a legal strategy that allows investors to lower their tax liability and earn a higher after-tax yield.

Investing in Municipal Bonds to Avoid Paying Tax on Interest