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Positive, tax-free carry can reach into the double digits. The bet in municipal bond arbitrage is that, over a longer period of time, two similar instruments--municipal bonds and interest rate swaps--will correlate with each other; they are both very high quality credits, have the same maturity and are denominated in U.S. dollars.
The triple tax exemption made Puerto Rican bonds highly attractive to U.S. municipal bond investors, and very low cost for Puerto Rican local government to issue. [ 11 ] [ g ] [ h ] [ i ] Puerto Rico thus began to issue debt to fund its expenses , a practice repeated for four decades since 1973. [ 14 ]
This is essentially how tax-free municipal bonds work. Investors lend money to the government in exchange for periodic interest payments until the bond reaches its maturity date, at which point ...
In many cases, it could make sense to go with a lower-yielding tax-free bond than a high-yielding traditional bond, because the after-tax yield on the muni bond is ultimately higher.
Bonds issued by the government of Puerto Rico and its subdivisions are exempt from federal, state, and local taxes (so called "triple tax exemption"). However, unlike other triple tax exempt bonds, Puerto Rican bonds uphold such exemption regardless of where the bond holder resides. [a] This has made Puerto Rican bonds extremely attractive to ...
This ‘triple-tax-free’ account is a huge win for American workers — but few use it properly. Here’s a simple way to save and grow cash in 2025. Chris Clark. December 8, 2024 at 7:44 AM.
Tax advantage refers to the economic bonus which applies to certain accounts or investments that are, by statute, tax-reduced, tax-deferred, or tax-free. Examples of tax-advantaged accounts and investments include retirement plans, education savings accounts, medical savings accounts, and government bonds.
The I bond rate is made up of the fixed rate, which applies for the 30-year-life of the bond, and a semiannual inflation rate calculated from a formula based on the six-month change in the non ...