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Municipal bond funds that carry _______ on their bonds guarantee payments of interest and principal.

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Insurance

Tax-free yields

Customer accounts

Insurance. The insurance guarantees that investors receive interest and principal even if the bond issuer defaults.

Municipal bond funds contain more general obligation bonds than revenue bonds.

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True

False

False. Generally, they contain more revenue bonds, since revenue bonds are much more common.

Municipal bond funds include all of the following except _______.

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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.

The bonds in municipal bond funds are issued by the federal government.

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True

False

False. States and smaller units of government issue them.

The lower a bond issuer's credit rating, the lower its bond coupon rate.

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True

False

False. The lower the credit rating, the higher the interest rate; this is how issuers with low credit ratings attract investors.

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