Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
The difference in yield between tax-exempt and taxable bonds, especially tax-free municipal bonds and taxable corporate bonds. A corporate bond yields less than its stated interest rate because of taxation, whereas a tax-exempt municipal bond does not. Thus, a municipal bond paying a lower interest rate will often net the bondholder more than a corporate bond with a slightly higher interest rate, depending upon one's tax bracket. See also: After-tax basis.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The difference in yield between municipal bonds and U.S. Treasury securities of the same maturity. The yield difference is important to investors who are considering the tax benefits of municipal bonds. MOB is an acronym for municipals over bonds.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.