Income Beginner: Introduction to Municipal Bonds

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1.
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.
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.
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.
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.