Which of the following statements are correct concerning municipal bonds?
I. Yields on municipal bonds are usually lower than yields on Treasury bonds.
II. Municipal bonds are most appealing to individuals with high incomes.
III. Interest on a municipal bond is exempt from federal income tax.
IV. Municipal bonds are less risky than Treasury bonds.
A) I, II, III and IV
B) I, II and III only
C) II, III and IV only
D) II and III only

Question

Quizplus · Accepted Answer

I, II, and III are correct. Municipal bonds typically offer lower yields compared to Treasury bonds due to their tax-exempt status, making them more appealing to high-income individuals who benefit from the tax exemption. The interest on municipal bonds is generally exempt from federal income tax. However, municipal bonds are not necessarily less risky than Treasury bonds; the risk depends on the specific issuer and economic conditions.

Which of the Following Statements Are Correct Concerning Municipal Bonds