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Municipal Bonds

A municipal bond is a debt security issued by a broad category of issuers, such as municipalities, cities, states, counties, parishes, towns, boroughs, villages, and special districts, to finance their capital expenditures or fill gaps in their cash flow. Municipal bonds are often exempt from federal taxes and from most state and local taxes, especially if one lives in the municipality in which the bond is issued. Municipal bonds can be issued to raise capital for infrastructure projects, such as maintaining and upgrading roads, bridges, sewers, schools, rail systems, and airports. These capital-intensive projects require large outlays and yield long-term benefits. Because of the nature of their cost-benefit structure, rather than attempting to pay the cost of the projects in a lump sum, the ...

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