Income Beginner: Introduction to Municipal Bonds

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1.
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.
2.
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.
3.
An insured bond carries a rating that is _______ that of a non-insured bond.
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Higher than. The insurance gives it a higher rating.
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.
Municipal bonds are usually issued in _______ denominations or multiples thereof.
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$5,000. In most cases, it is $5,000.