Which One of the Following Is the Distinguishing Characteristic of a Municipal

question 25

Multiple Choice

Which one of the following is the distinguishing characteristic of a municipal bond fund?

• A)high-yield
• B)federally tax-free income
• C)mortgage backed
• D)short-term
• E)low quality

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Definitions:

Excise Tax

A tax imposed on the sale of specific goods and services, such as tobacco, alcohol, and gasoline.

Marginal Rate

The rate at which the cost or value of something changes with a one-unit increase in quantity or production.

Taxable Income

The amount of income used to calculate how much tax an individual or a company owes to the government in a given tax year.

Average Tax Rate

The proportion of total income that is paid in taxes, calculated by dividing total taxes paid by total income.