The Interest Paid on Any Municipal Bond Is

question 15

Multiple Choice

The interest paid on any municipal bond is:

• A)free of default risk.
• B)subject to default risk and is exempt from state income taxation.
• C)free of both default risk and federal income taxation.
• D)exempt from federal income taxation and may or may not be exempt from state taxation.
• E)taxable at the federal level and tax exempt at the state and local level.

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Definitions:

Depreciated

The reduction in the value of an asset over time due to wear and tear or obsolescence.

Ordinary Maintenance

Routine upkeep and repair of equipment and facilities to keep them in their original condition without significantly enhancing their value or extending their life.

Book Value

The net asset value of a company calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Market Value

The existing rate at which an asset or service can be sold or acquired.