Which of the Following Statements About Municipal Bonds Is True

question 55

Multiple Choice

Which of the following statements about municipal bonds is true?

• A)Investors in lower tax brackets are usually better off investing in a municipal bond than in a corporate bond.
• B)An investment in a municipal bond is always preferable to investing in a corporate bond of the same risk because the municipal bond pays interest that is exempt from federal
• Taxation.
• C)Municipal bonds are similar in risk to Treasury bonds of the same maturity.
• D)None of the above is a true statement.

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Definitions:

Periodic Inventory System

An inventory accounting system that updates inventory balances and cost of goods sold at the end of an accounting period.

Cost Of Goods Sold

A financial measure that calculates the cost incurred to produce products sold by a company, including materials and labor.

Gross Profit

The income a business earns once it subtracts the expenses involved in producing and marketing its goods, or the expenses related to delivering its services.

Other Revenue And Expenses

These refer to the income and costs that are not related to the main business activities of a company.