Municipal bonds are issued by state and local governments to fund public projects like schools and roads. They are exempt from federal income tax and often from state and local taxes as well. This makes them a popular choice for investors in higher tax brackets who want to minimize their tax burden.

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Municipal Bonds

Question 69

Multiple Choice

Municipal bonds

A) are issued by state and local governments.
B) pay interest that is fully taxable.
C) are issued by corporations.
D) are issued by the federal government.

Correct Answer: