Municipal bonds
Not what you're looking for?
Municipal bonds might pay a risk premium over the default-free bond yield because:
A. The default risk on corporate bonds falls below that on municipal bonds.
B. The default risk on municipal bonds exceeds that on treasury bonds.
C. The liquidity of municipal bonds exceeds that of treasury bonds.
D. Default-free treasury bonds include more income tax breaks relative to municipal bonds.
Purchase this Solution
Solution Summary
This solution explains why municipal bonds are likely to pay a risk premium over a default-free bond.
Solution Preview
A. The default risk on corporate bonds falls below that on municipal bonds.
The default-free bond (i.e. risk-free) will never default, so you may be 100% sure to get your investment back. Risk-free bonds are usually ...
Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.