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Funds 309: Municipal Bond Funds

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1.
The bonds in municipal bond funds are issued by the federal government.
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False. States and smaller units of government issue them.
2.
The collateral for revenue bonds comes from the projects that they fund.
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True. The tolls, rents, etc. serve as collateral in the event of default.
3.
Municipal bond funds contain more general obligation bonds than revenue bonds.
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False. Generally, they contain more revenue bonds, since revenue bonds are much more common.
4.
A "tax-free fund" is likely to be a municipal bond mutual fund.
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True. Most tax-free funds invest in municipal bonds.
5.
Which of the following does not affect a municipal bond fund's coupon rate?
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Inflation. Inflation affects the purchasing power of returns, but only after they have been earned.