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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Sunday, September 24, 2006

Municipal Bonds

Municpal bonds are another form of bonds that investors can choose. We will discuss the characteristics of munipal bonds.

  1. Investment objectives are strictly income
  2. Liquidity low to high
  3. There is a high to low fluctuation of pricipal and return
  4. Interest payments are exempt from federal taxes. You may be subject to the alternative minimum tax (AMT). Federal taxes apply to any capital gains
  5. You are a creditor of issuiong municipality and are subject to default risk
  6. Do not hold tax-exempt investments in retirement accounts.

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