Income Beginner: Introduction to Municipal Bonds

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1.
In addition to receiving income from municipal projects, some revenue bonds may be secured by _______.
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Private endowments. Individual or corporate investors may donate funds to help pay off a revenue bond issue.
2.
All the earnings on a municipal bond are tax-free at the federal level.
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False. The capital gains on the sale of a municipal bond are taxable.
3.
The two types of municipal bonds are revenue and agency bonds.
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False. The two types are revenue and general obligation bonds.
4.
Insured bonds pay interest rates that are _______ those of non-insured bonds.
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Lower than. The insurance makes them safer in the eyes of investors, so issuers can offer lower interest rates.
5.
Why are municipal bonds sold to the public?
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To raise money to finance operations or projects. Like all forms of government bonds, municipals pay for these expenditures.