A municipal bond is a bond issued by a local government, or their agencies. Potential issuers of municipal bonds include cities, counties, redevelopment agencies, special-purpose districts, school districts, public utility districts, publicly owned airports and seaports, and any other governmental entity (or group of governments) below the state level. Municipal bonds may be general obligations of the issuer or secured by specified revenues.
In the United States, interest income received by holders of municipal bonds is often exempt from the federal income tax and from the income tax of the state in which they are issued, although municipal bonds issued for certain purposes may not be tax exempt.
Unlike new issue stocks that are brought to market with price restrictions until the deal is sold, municipal bonds are free to trade at any time once they are purchased by the investor. Professional traders regularly trade and retrade the same bonds several times a week.
Read more about Municipal Bond: History, Types of Tax-exempt Bonds, Purpose of Municipal Bonds, Risk, Disclosures To Investors, Comparison To Corporate Bonds, Subprime Mortgage Crisis, Default Rates, Build America Bonds, Statutory History
Famous quotes containing the words municipal and/or bond:
“No sane local official who has hung up an empty stocking over the municipal fireplace, is going to shoot Santa Claus just before a hard Christmas.”
—Alfred E. Smith (1873–1944)
“The bond between a man and his profession is similar to that which ties him to his country; it is just as complex, often ambivalent, and in general it is understood completely only when it is broken: by exile or emigration in the case of one’s country, by retirement in the case of a trade or profession.”
—Primo Levi (1919–1987)