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1.
The tax status of general obligation municipal bonds makes them an undesirable investment for individuals in the higher tax brackets.
False. The tax-free status of general obligation municipal bond interest makes these bonds desirable for those in the higher tax brackets.
2.
A municipality's full faith and credit includes municipal taxes, bond issues, and user fees.
False. A municipality's full faith and credit includes taxation and borrowing, but not project revenue like user fees.
3.
All of the following are examples of taxes that municipalities may use to pay general obligation bondholders, except _______.
User fees. User fees are not an example of the kind of taxes municipalities use to pay bondholders.
4.
Individuals who want to invest in general obligation municipal bonds will need at least $5,000 to get started.
False. By purchasing shares in a pool of bonds, such as a mutual fund or unit investment trust, it is possible to invest in general obligation bonds for less than the typical face-value price of $5,000.
5.
General obligation bonds can be effective investments for those who seek a high degree of safety from their investments.
True. General obligation bonds are typically highly rated for their low default risk.
