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Municipal Bond

A bond issued by a local or state government. Municipal bonds are usually used to raise capital for improvements in infrastructure or other aspects of the municipality. For example, a city or school district may issue a bond to build a new school or a new playground. Municipal bonds are exempt from federal income taxes and sometimes from state and local taxes as well. Municipals usually pay lower coupons than corporate bonds, but because the yield is tax-free, the after-tax basis may be higher for a municipal bond. Risk varies with the municipality and the particular type of municipal bond. It is sometimes called a municipal improvement certificate.


Municipal bond (muni).

Municipal bonds are debt securities issued by state or local governments or their agencies to finance general governmental activities or special projects.

For example, a state may float a bond to fund the construction of highways or college dormitories.

The interest a muni pays is usually exempt from federal income taxes, and is also exempt from state and local income taxes if you live in the state where it was issued.

However, any capital gains you realize from selling a muni are taxable, and some muni interest may be vulnerable to the alternative minimum tax (AMT).

Munis generally pay interest at a lower rate than similarly rated corporate bonds of the same term. However, they appeal to investors in the highest tax brackets, who may benefit most from the tax-exempt income.

References in periodicals archive ?
Munir has set the right direction for trade and business community which brought significant development in the economy of the country.
After trailing behind on the first round, Munir showing consistency in excellence ended the event in blaze of glory winning the title by two strokes.
Earlier attempts to destroy it (in which Munir was also the participant) proved to be futile as the target was well- camouflaged.
Judge Munir Haddad announced the rising a lawsuit against current Vice-President of the Republic, former Prime Minister Nuri al-Maliki, for threatening to kill him.
Enrique clearly believes Munir is a bright prospect for the future, and has shown his faith by selecting the youngster in seven of Barcelona's eight La Liga games this season.
The judge said Munir, of Tollesby Road, Middlesbrough, abused his position of trust as a taxi driver and took advantage of girls.
Prosecutor Alex Bozman said that Munir stashed goods worth over PS160 into a carrier bag.
The DFSA asked for information on the bank's dealings with Munir Kaloti, according to court documents filed on October 31 and made public on November 17.
Much was expected of Gary Knight, who trailed Munir by two shots going into the final round, but the US prodigy quickly handed the initiative away by dropping two shots on the fourth.
CHELTENHAM Festival-winning owner Simon Munir has decided to reroute a small team of horses based with champion trainer Paul Nicholls to France, where the owner has already enjoyed notable success, writes L ewis Porteous.
Swiss Aviation Consulting has said that in April, Munir Al-Dzhidi joined the group.
Munir, 30, was born in Baghdad and has played in several top leagues.