Content
- What Are Municipal Bonds?
- An Investment For Today's Tax-conscious Investor
- How Safe Are Municipal Bonds?
- The Advantages of Tax Exemption
- Understanding Yields
- Understanding Market Risk
- Understanding Calls
- Gains and Losses
- Types of Tax-exempt Municipal Bonds
- Bonds With Special Investment Features
- Taxable Municipal Bonds
- Other Basic Facts
- The Tax-exempt Municipal Bond Market-How Big and Who Buys?
- Tax-exempt/Taxable Yield Equivalents
- State Taxation of Municipal Bonds for Individuals
- State Taxation of Municipal Bonds for Corporations
- Glossary
All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association (SIFMA) from our membership and other sources believed by SIFMA to be accurate and reliable. By providing this general information, SIFMA is neither recommending investing in securities, nor providing investment advice for any investor. Due to rapidly changing market conditions and the complexity of investment decisions, please consult your investment advisor regarding investment decisions.
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- Bond Basics
- Bonds With Special Investment Features
- Looking for Specific Bonds?
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Bonds With Special Investment Features
Variable rate bonds. The interest rate of these bonds is calculated periodically, and is typically based upon a percentage of prevailing rates for Treasury bills and other interest rates.
Put bonds. Some bonds have a “put” feature which allows you to sell the bond at par value on a specified date before its maturity date and recoup the principal and accrued interest.
Zero-coupon, compound-interest and multiplier bonds. These are issued at a deep discount to the maturity value and do not make periodic interest payments. At maturity, an investor will receive one lump sum payment equal to principal invested, plus interest compounded semiannually at the original interest rate. Because they do not pay interest until maturity, the prices of these bonds tend to be volatile. These bonds may be attractive if you seek to accumulate capital for a long-term financial goal such as retirement planning or college costs.
Insured municipal bonds. Some municipal bonds are backed by municipal bond insurance specifically designed to reduce investment risk. In the unlikely event of payment default by the issuer, an insurance company, which guarantees payment, will send you both interest and principal when they are due.
