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A municipal bond is a bond issued by a below-federal public agency. Such entities as cities, states and public hospitals issue them. The slick thing about munis is if you buy munis issued by an agency in your state, your earnings from them will be free of state taxes. The cheap answer to the second question is, "go to a municipal bond broker." While this is true, it's more complex than that. There are two ways you can buy these: as new issue, or in the secondary market. For new issue, Fidelity Investments is pretty good. Stoever Glass is big in the secondary market. Either way, munis are sold a little different than other kinds of issues: you open an account, tell your broker what you're looking for ($10,000 worth of AA-rated, or better, paper from New Jersey with a 4.5% coupon and at least a 2011 maturity date, for instance) and when some comes in they'll execute the transaction. What you'll wind up with is kinda pot luck...you could get Atlantic City Fire Department bonds, Point Pleasant School System debentures or Port Authority bonds.

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βˆ™ 16y ago
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βˆ™ 16y ago

Basically, it's when a city needs to raise money for a project (like a new road) they borrow the money by issuing a bond. The bond is repaid through the taxes paid to the city over a number of years.

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βˆ™ 14y ago
On One Hand: Traditionally Safe Investment

According to Richard Lehman of Forbes Magazine, municipal bonds traditionally have been thought of as one of the safest investments, where money could be placed as a hedge against inflation, even in periods of high market volatility, and ensure a steady return on the investment. Municipalities are considered unlikely to collapse and default on their debts.

On the Other: Not as Safe as They Used to Be

These bonds are insured by companies that may have problems of their own, as has happened in the past. In April 2009, the Wall Street Journal reported that U.S. Rep. Barney Frank of Massachusetts even suggested that the federal government should step in to insure the bonds.

Bottom Line

Forbes says most municipalities aren't likely to default, but they're not infallible.

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Q: What is municipal bonds?
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Related questions

How are municipal bonds used?

Municipal bonds are used to borrow against assets.


When are municipal bonds exempt from taxes?

Municipal Bonds are bonds that are tax exempt from many tax offices. Municipal Bonds are exempt from tax when they are accepted by the local tax office depending on the law of the state.


Which Oregon Municipal Bonds are available?

I believe this is the best and most updated list of Oregon Municipal Bonds that are available. http://investment-income.net/rates/municipal-bonds-rate-page


Where can you get insured municipal bonds?

When looking to secure insured municipal bonds to gain some advice before securing any. Sites such as Bank Rate offer information about insured municipal bonds. Information about how to get insured municipal bonds is available from the news section of the Morning Star website.


Where can information on buying municipal bonds be found?

An investment banker can provide information on municipal bonds and stocks. When purchasing municipal bonds you are technically lending money to the bond and in return getting reimbursed with interest.


What are some websites that I could learn about municipal bonds?

Municipal bonds are isused by counties, cities and states. They can be purchased directly from them upon their release. Another way to buy municipal bonds is through a broker.


Where does one find information about purchasing municipal bonds?

One can find out information about purchasing municipal bonds from the Securities and Exchange Commission website. There is an informative bulletin regarding municipal bonds located on their website.


What are the two types of municipal bonds?

The two main types of municipal bonds are general obligation bonds, which are backed by the full faith and credit of the issuing municipality, and revenue bonds, which are backed by the revenue generated from a specific project or source, such as tolls or utility fees.


What has the author William L Raymond written?

William L. Raymond has written: 'State and municipal bonds' -- subject(s): Investments, Municipal bonds, State bonds


How do you find available Oregon taxfree municipal bonds?

Go to Income-Investment.net Oregon Municipal Bonds they have hundreds. www.Investment-Income.net.


How many municipal bonds exist?

As of January 2011, there were 1.2 million different municipal bonds issues according to Bond Buyer.


Are interest earnings from municipal bonds tax exempt?

No, interest earnings from municipal bonds are not tax exempt at the federal or state level.