Yields on tax-exempt bonds are typically ________ yields on corporate bonds of similar risk and time to maturity.

Question

Quizplus · Accepted Answer

Tax-exempt bonds have a lower yield than corporate bonds of similar risk and time to maturity because the interest income from tax-exempt bonds is not subject to federal income tax. This tax advantage makes tax-exempt bonds more attractive to investors, leading to lower yields compared to taxable corporate bonds.

Yields on Tax-Exempt Bonds Are Typically ________ Yields on Corporate