If Congress were to eliminate the tax-exempt status of municipal bonds, which of the following would necessarily be true?

Question

Quizplus · Accepted Answer

The elimination of the tax-exempt status of municipal bonds would mean that the interest income from these bonds would be subject to federal income tax, just like the interest from other types of bonds. To compensate for this loss of tax advantage and to remain attractive to investors, the issuers of municipal bonds would likely need to offer higher yields. This is because investors would demand a higher return to compensate for the additional tax burden.

If Congress Were to Eliminate the Tax-Exempt Status of Municipal