Asked by Bruno Vieira on May 02, 2024
Verified
Which of the following statement(s) is (are) true regarding municipal bonds?I) A municipal bond is a debt obligation issued by state or local governments.II) A municipal bond is a debt obligation issued by the federal government.III) The interest income from a municipal bond is exempt from federal income taxation.IV) The interest income from a municipal bond is exempt from state and local taxation in the issuing state.
A) I and II only
B) I and III only
C) I, II, and III only
D) I, III, and IV only
E) I and IV only
Municipal Bonds
Tax-exempt bonds issued by state and local governments. General obligation bonds are backed by the general taxing power of the issuer. Revenue bonds are backed by the proceeds from the project or agency they are issued to finance.
Debt Obligation
A commitment to repay borrowed money, typically in the form of loans or bonds, with specific terms and interest rates.
- Grasp the features and tax advantages of municipal bonds.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
D
Explanation :
Municipal bonds are issued by state or local governments (I), not the federal government (II). The interest income from these bonds is typically exempt from federal income taxes (III), and often exempt from state and local taxes in the issuing state (IV).
Learning Objectives
- Grasp the features and tax advantages of municipal bonds.