A tax risk associated with investing in municipal bonds is that the highest marginal tax rate will be reduced, resulting in a rise in the value of municipal bonds.

Question

Quizplus · Accepted Answer

The statement is incorrect. Municipal bonds are generally issued by local governments and are exempt from federal income tax. Therefore, any changes in the highest marginal tax rate should not have a significant impact on the value of municipal bonds.

A Tax Risk Associated with Investing in Municipal Bonds Is