Income Beginner: Introduction to Municipal Bonds

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1.
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.
2.
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.
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.
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.
5.
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.