What Is Municipal Bond?
A debt security issued by a state, city, or other local government entity, or by a government agency, to fund public works and services. Interest income is typically exempt from federal income tax and often state and local taxes. Municipals are generally lower-yielding than taxable corporates because of the tax advantage, and credit risk depends on the issuer's financial health.
Municipal Bond across 2 exams
Municipal Bond appears on the following exams. Each defines it in the context candidates are tested on:
- SIE
- A debt security issued by a state, city, or other local government entity, or by a government agency, to fund public works and services. Interest income is typically exempt from federal income tax and often state and local taxes. Municipals are generally lower-yielding than taxable corporates because of the tax advantage, and credit risk depends on the issuer's financial health.
- Series 7
- A debt security issued by a state, city, or local government to fund public projects, whose interest is generally exempt from federal income tax. The two main types are general obligation bonds (backed by taxing power) and revenue bonds (backed by project income).