Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Briefly describe what type of investor would choose municiple bonds and why?
Expert Solution
Step 1
Municipal bonds that are issued by the respective city or local governments. These bonds are normally issued by the government with a view to collect funds for public development projects like construction or development of any schools, construction of bridges, highways, hospitals or any other utilities.
Municipal bonds carry interest with them depending upon the term of the bond which varies from few months upto certain years. The government would get cash in return from the investor who bears the interest, After the maturity period, the face value will be reimbursed back to the investor itself.
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