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First, muni bonds are often investment-grade assets. Around seven out of 10 in the Bloomberg Municipal Bond Index are in the top two rungs of credit quality, Schwab cited.
In a new post at the New York Federal Reserve's blog site, three bank officials took a look at the $3.7 trillion US municipal bond market. After noting that about 75% of US municipal bonds are ...
Despite the yield curve inversion in two- and 10-year Treasury bonds, there are plenty of opportunities for investors to earn stable yield, including municipal bonds, experts say. Municipal bonds ...
A municipal bond, commonly known as a muni, is a bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal bonds is often, but not always, exempt from federal and state income taxation.
Muni arb is a relative value strategy that seizes upon an inefficiency that is related to government tax policy; interest on municipal bonds is exempt from federal income tax. [1] [2] Because the source of this arbitrage is artificially imposed by government regulation, it has persisted (i.e., it has not been "arbed away") for decades. [3]
Muni bonds are a more attractive option for investors in high-tax states and cities, so investors in those areas should be sure to calculate the tax-equivalent yield on potential muni investments.
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The municipal treasurer does not have the public's permission to put public funds principal at risk, no matter how great the potential yield. Securities options, therefore, are limited by statute to the safest portion of the investment continuum. Public Treasury statutes mandate a priority of safety (first), liquidity (secondarily) and yield ...