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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.
A risk-free bond is a theoretical bond that repays interest and principal with absolute certainty. The rate of return would be the risk-free interest rate. It is primary security, which pays off 1 unit no matter state of economy is realized at time +. So its payoff is the same regardless of what state occurs.
Disadvantages: Greater risk than Treasurys, particularly for high-yield bonds. Municipal bonds. Municipal bonds, or munis, are issued by state and local governments and are often used to fund ...
In general, municipal bonds come with a low risk of default and have less volatility than riskier corporate bonds or stocks. ... Fidelity Tax-Free Bond Fund (FTABX)
Municipal bonds generally carry less risk than stocks and are tax-exempt, which for higher tax-bracket investors effectively increases the return rate. It’s crucial to highlight though, that ...
Government bonds are conventionally considered to be relatively risk-free to a domestic holder of a government bond, because there is by definition no risk of default – the bond is a form of government obligation which is being discharged through the payment of another form of government obligation (i.e. the domestic currency). [5]
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