Which of the following are factors that affect the marketability of municipal GO bonds?

Which of the following are factors that affect the marketability of municipal GO bonds?

Some of the factors considered in assessing the marketability of a municipal bond offering include:

• the credit rating of the issuer.
• the reputation of the issuer.
• the coupon rate on the bond.
• any callable or sinking fund provisions in the bond.
• the maturity date or term of the bond.

What affects the municipal bond market?

Changes in interest rates and interest rate expectations are generally the primary factors involved in municipal bond secondary market prices. When interest rates fall, newly issued bonds will pay a lower yield than existing issues, which makes the older bonds more attractive.

Why do municipalities issue bonds?

Municipal bonds are debt securities issued by states, cities, counties and other governmental entities to fund day-to-day obligations and to finance capital projects such as building schools, highways or sewer systems.

What is the future of municipal bonds?

For additional information on ESG see our Fixed Income Solutions Special Report. Although there is no universal standard for labeling an ESG security in the municipal market, there are internationally recognized frameworks that municipalities can follow to label their bonds.

What are the advantages and disadvantages of investing in a municipal bond?

Pros and cons of municipal bonds

Pros	Cons
Tax-exempt from federal and possibly state and local income tax.	If interest rates rise, market prices of existing bonds will go down.
Low volatility; safe investment.	Don’t hold up against inflation as well as stocks.
Low default risk.	Still a chance of default. Ex: Detroit.

WHO Issues Municipal Bond?

Municipal bonds (“munis”) are debt securities issued by state and local governments. These can be thought of as loans that investors make to local governments, and are used to fund public works such as parks, libraries, bridges & roads, and other infrastructure.

What is a municipal bond market?

The municipal bond market is one of our nation’s most remarkable financial institutions, providing a mechanism whereby more than 50,000 state and local government units can raise money for public purposes such as water and sewer systems, schools, highways and public buildings.

Why does a corporation issue bonds?

Issuing bonds is one way for companies to raise money. The investor agrees to give the corporation a certain amount of money for a specific period of time. In exchange, the investor receives periodic interest payments. When the bond reaches its maturity date, the company repays the investor.

What advantage do most municipal bonds have over other investments?

Investing in municipal bonds is a good way to preserve capital while generating interest. Most of them are exempt from federal taxes, and some are tax-free at the state and local level as well.

How does inflation affect municipal bonds?

When you invest in municipal bond at a fixed rate, high inflation eats into real returns and makes your investment riskier. For example, if inflation is 5 percent and your bond interest is 8 percent, your real return is only 3 percent.

What are the cons to a municipal bond?

Cons

• Munis may have low yields. Compared to the returns you can get with stocks, exchange-traded funds, or mutual funds, the interest rate on municipal bonds is low.
• Opportunity cost.
• They may not be liquid.