Income Beginner: Introduction to Municipal Bonds

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1.
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.
2.
General obligation bonds finance projects that produce revenue (tolls, rents, etc.).
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False. General obligation bonds finance non-revenue-producing projects, such as public roads.
3.
Municipal bonds are usually issued in _______ denominations or multiples thereof.
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$5,000. In most cases, it is $5,000.
4.
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.
5.
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.