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Bond miscellanea

Q

How can you find out when dividends are paid on muni bonds? Do they have an ex-dividend date like stocks? How is interest paid to (say new buyer)? Is interest prorated between old holder and new holder? Seems like you should know these things when buying tax-exempt bonds.

K.B. Alaska

A

James A. Klotz responds:

The vast majority of municipal bonds pay interest semi-annually.

You are correct. If a bond is bought or sold in between payment dates, the accrued interest is prorated to reflect the number of days since the last interest payment.

Interest on tax-free bonds is computed on a 30-day per month/360-day per year basis. There is no ex-dividend date.

Mar 7, 2005

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