Income Beginner: Introduction to Municipal Bonds

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1.
Why do revenue bonds pay more interest than general obligation bonds?
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They involve more risk. There is the danger that the projects they finance may fail to bring in sufficient revenue.
2.
Of the following tax brackets, which one will leave you with the highest yield on a municipal bond compared to a taxable bond?
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35 percent. The higher the tax bracket, the more you earn when the bond is compared to a taxable bond.
3.
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.
4.
What is the security behind general obligation bonds?
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The creditworthiness of the issuer. There is no monetary backing or other collateral.
5.
Anyone with a municipal bond can get insurance for it.
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False. An individual needs to have $50,000 or more in muni bonds to get insurance.