Municipal bonds tend to have lower yields than other bonds, ceteris paribus, due to

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Quizplus · Accepted Answer

Municipal bonds tend to have lower yields than other bonds primarily because the interest income from these bonds is often exempt from federal income taxes, and in some cases, state and local taxes as well. This tax advantage can make them more attractive despite their lower yields, rather than higher default risk, taxes, or liquidity issues.

Municipal Bonds Tend to Have Lower Yields Than Other Bonds