Your neighbor asks you about Municipal Bonds, you would be correct in telling him all of the following EXCEPT:
a) Capital gains from the sale of municipal bonds are exempt from federal income taxes
b) Municipal bond income is sometimes exempt from state tax
c) Income from a revenue bond is payable from the earnings of the income-producing facility
d) General Obligation bonds are backed by the full faith and credit of the issuer
The correct answer is a):
The two types of Municipal Bonds (Muni-Bonds) are general-obligation (GO) bonds and revenue bonds. GO bonds are backed by the full faith and credit of the issuing authority and usually include city, county, and school district bonds- their income payments are made from the taxes collected. Revenue Bonds are issued to finance income-producing facilities such as airports, colleges, electric and gas systems- their income is paid from the revenues of the project. The income generated from a muni-bond is exempt from federal taxes, and sometimes exempt from state taxes if issued in the state of residence of the taxpayer. Capital gains are taxed at the ordinary capital gains rate.


  1. Is a financial advisor required to have a degree?

    Discover the minimum educational requirements and financial licenses needed to become a financial advisor in the modern corporate ...
  2. If I have only a limited amount of time to study for the Series 6, what should I ...

    Learn what to focus on when studying for the Series 6 while reviewing important aspects of the exam, including its content ...
  3. What role does the 'chip cycle' play in the electronics sector?

    Read about some of the best and most popular test prep classes for the Series 6 FINRA securities licensing exam, including ...

    Learn more about the Series 6, what the examination and license are and what the license enables an individual to buy, sell ...
  1. Series 6

  2. Series 79

    A examination to ensure a candidate is qualified to become a ...
  3. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  4. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  5. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  6. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...

You May Also Like

Hot Definitions
  1. Zero-Sum Game

  2. Capitalization Rate

  3. Gross Profit

  4. Revenue

  5. Normal Profit

  6. Operating Cost

Trading Center
You are using adblocking software

so you'll never miss a feature!