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Course Catalog
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Funds
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300
Funds 309:
Municipal Bond Funds
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
A "tax-free fund" is likely to be a municipal bond mutual fund.
Choose wisely. There is only one correct answer.
True
False
True. Most tax-free funds invest in municipal bonds.
2.
Municipal bond funds earn less than corporate bond funds because their bonds are _______.
Choose wisely. There is only one correct answer.
Insured
Tax-free
More volatile
Tax-free. Issuers of municipal bonds can afford to offer less because investors will save money on taxes.
3.
The lower a bond issuer's credit rating, the lower its bond coupon rate.
Choose wisely. There is only one correct answer.
True
False
False. The lower the credit rating, the higher the interest rate; this is how issuers with low credit ratings attract investors.
4.
The collateral for revenue bonds comes from the projects that they fund.
Choose wisely. There is only one correct answer.
True
False
True. The tolls, rents, etc. serve as collateral in the event of default.
5.
Municipal bond funds include all of the following except _______.
Choose wisely. There is only one correct answer.
Municipal notes
General obligation bonds
Revenue bonds
Corporate bonds
Corporate bonds. Companies in the private sector issue corporate bonds; that is why they cannot be included in municipal bond funds.
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DONE