The Dakota National Bank has purchased a security issued by the state of Tennessee that has 20 years to maturity.What type of security has it purchased?

Question

Quizplus · Accepted Answer

The security purchased by Dakota National Bank is a 20-year bond, indicating it is a long-term investment. Since the issuer is the state of Tennessee, it is most likely a Municipal Bond. Municipal bonds are issued by state and local governments to finance public works, such as schools, highways, and water systems. The interest earned is usually exempt from federal taxes and sometimes exempt from state taxes as well.

The Dakota National Bank Has Purchased a Security Issued by the State