Corporate And Municipal Bonds
corporate and municipal bonds
About Municipal Bonds and Online Portfolios
A Municipal Bond is essentially a promissory note issued by the city or local government. It offers a certain rate of interest for a fixed period of time. Municipal bonds are similar to other debt collecting instruments such as notes and debentures. Other than a city or local government, in the US, municipal bonds are also issued by school districts, and all other government agencies.
Government agencies and corporations issue bonds to raise large sums of money from investors. The money raised from municipal bonds is used in public welfare activities such as constructing roads, hospitals, and schools. Corporations issue these types of bonds for many activities such as constructing new offices, purchasing new equipment and much more.
People prefer to invest in municipal bonds because the interest generated from them is exempt from federal income tax and other state taxes. There are two types of municipal bonds that are issued by the city or local government:
1) General obligation bonds: These types of muni bonds are issued by the government when they need money for public welfare or for the development of society. General obligation bonds are the most secure bonds, compared to other types of bonds, but the rate of interest on the other hand is much lower.
2) Revenue bonds: These types of bonds are issued to assist with financial projects such as constructing bridges and power plants. The interest is utilized from the income generated from these projects.
When you begin investing in municipal bonds, it is very important to derive a proper investment strategy. A bond portfolio can help you in making the right decision and preparing an effective investment strategy. A bond portfolio can help you get the actual price and muni bond yields of your bonds on a particular date. With the help of a bond portfolio, one can also manage multiple municipal bonds at the same time.
The internet is the best option to manage your bond portfolio. You can find various websites that provide municipal bond portfolio manager tools. These websites also provide municipal bond information, news and ratings of your particular bond; and, these tools help you in saving time and money.
What is the taxable portion of Mrs. K’s income in 2008?
Mr. K died at the beginning of the year. Mrs. K received interest during the year from the following sources:
Corporate bonds$1,000
Bank savings account 500
Personal loan to a friend 500
City of Maryville municipal bonds (issued to build a new high school) 600
In addition to the above, Mrs. K was the beneficiary of her husband’s $100,000 life insurance policy. She elected to receive the $100,000 proceeds plus interest over the next 10 years. She receives $13,500 in the current year and will receive a like amount each of the following nine years. Calculate the taxable portion of the interest income received by Mrs. K during the year.
Spend some time and do some research, you won’t learn a damn thing by just asking for answers.
Lebenthal: What I Look For in a Municipal Bond
