Income Beginner: Introduction to Municipal Bonds

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1.
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.
2.
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.
3.
Which of the following is not used to secure a revenue bond?
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Sales tax. Revenue bonds are secured by the revenues of projects they fund.
4.
What does taxable equivalent yield tell you?
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How much you'd have to earn on a taxable bond to equal what you are earning on a municipal bond. You can use the formula to figure out whether to buy a municipal or a taxable bond.
5.
Why are municipal bonds sold to the public?
Choose wisely. There is only one correct answer.
To raise money to finance operations or projects. Like all forms of government bonds, municipals pay for these expenditures.