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Municipal bond arbitrage, also called municipal bond relative value arbitrage, municipal arbitrage, or just muni arb, generally consists of building a leveraged portfolio of high-quality, tax-exempt municipal bonds and simultaneously hedging the duration risk in that municipal bond portfolio by shorting the equivalent taxable corporate bonds.
Interest income from Treasury bonds is subject to federal income tax but exempt from state and local taxes. This exemption can be particularly beneficial for investors in high-tax states.
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.
The appeal of municipal bonds lies in their tax advantages. Their interest income is typically exempt from federal income tax, and potentially state and local taxes if the investor resides in the ...
Named after its legislative sponsors, the Marks-Roos Local Bond Pooling Act (California Government Code §6584-6599.1) is a law enacted by the California Legislature in 1985. [ 1 ] [ 2 ] The main purpose of this statute is to allow local California governments to work together to get financing in a way that will conceivably lower borrowing costs.
For example, imagine you pay federal tax at a 24 percent rate and state tax at a rate of 6 percent, and the municipal bond offers a yield of 3 percent.
Revenue Bond of the City of New York, issued 3. June 1858, signed by mayor Daniel F. Tiemann. A revenue bond is a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax.
Taxes on interest from a bank account or bonds. Taxes on interest from bank accounts and most bonds (corporate, Treasury) are assessed at ordinary tax rates and are due when you file your income ...