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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.
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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.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
The Munir Group is one real estate agency that has managed to set itself apart from the rest due to their excellent services.
Munir's parents staged a protest and blocked Harappa Road for two hours.
Dr, Munir Baloch stated Prime Minister Imran Khan has introduced comprehensive reforms to curb corruption and ensure good governance in the country.
Munir passed away on March 15 and left behind a note lamenting disrespectful treatment meted out by NAB officials.
The committee reviewed a video of Munir's NAB interviews.
A day earlier, the NAB chairman had decided to hold an inquiry into the alleged suicide of Brigadier (retd) Munir, who was under inquiry by the probe body.
In a statement issued by NAB Monday said that Chairman NAB had directed the NAB Rawalpindi to submit the whole record related to cases against Munir. Munir had raised serious questions over professionalism of National Accountability Bureau in a letter which he left after taking his life on last week and requested the apex court in his suicide note to take notice of Bureau's investigation against him.
In a statement issued by the anti-graft watchdog, the NAB chairman will himself investigate into the alleged suicide of Asad Munir.
The top judge has summoned the references against Munir from Chairman National Accountability Bureau (NAB) Justice (retd) Javed Iqbal.
Mohammed Munir, 25, was overtaking his cousin's car at twice the speed limit when he hit John Harkins, 33, a court heard.
The injured were identified as groom 's father Master Munir Ahmed, brother Hakeem Munir and Atif Munir including some guests, they all were shifted to a hospital.
Summary: Rawalpindi [Pakistan], Oct 12 (ANI): Apart from his years of experience in intelligence, Pakistan's newly appointed Inter-Services Intelligence (ISI) Chief Lt Gen Asim Munir is a 'Hafiz-e-Quran' who memorised the Quran during his posting in Saudi Arabia as Lt Colonel.