The coupon rate on newly issued bonds is usually ________ for bonds with favorable tax treatment, such as municipal bonds, and ________ for bonds that are very risky, such as junk bonds.

Question

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Coupon rates are usually lower for tax-favored bonds because of their tax-exempt status. Conversely, very risky bonds bear higher interest rates because the holder is less certain he/she will get the money back.

The Coupon Rate on Newly Issued Bonds Is Usually ________