An investor who is contemplating the purchase of tax-free municipal bonds should consider:

Question

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When considering the purchase of tax-free municipal bonds, an investor should consider both the impact on taxable Social Security income as well as the possibility of triggering the alternative minimum tax (AMT). If an investor earns too much tax-exempt income or has too many tax deductions, it could raise their AMT liability. However, pension income is typically not impacted by tax-free municipal bonds. Therefore, choices A and B are important factors to consider, while choice C is not as relevant.

An Investor Who Is Contemplating the Purchase of Tax-Free Municipal