Wednesday, December 29, 2010

Municipal Bond

A municipal bond (also known as a 'muni') is a debt security in the US issued by a city, state, or local government in order to finance various projects and capital expenditure. Typically the interest paid on municipal bonds will be free from federal income tax and sometimes state, and local taxes as well, meaning the investor gets to keep more of the interest payments - thus investors in these bonds can require a lower nominal interest rate. US bond funds are likely to have a certain portion of municipal debt, and there may even be specialist funds which invest only in municipal bonds.

Synonyms: Muni, Local government debt, Government debt, Government bonds

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