Question

Yields on municipal bonds are typically ___________ yields on corporate bonds of similar risk and time to maturity.

Answer 1

Yields on municipal bonds are typically lower than yields on corporate bonds of similar risk and time to maturity.

Municipal bonds, sometimes known as "munis," are a staple of portfolios that invest for income. High yield municipal bonds are a good option for investors who want higher returns. These bonds are riskier but pay out more than their investment-grade counterparts. It's likely that you won't ever get that money back. Here is how they function.

The issuer of a high yield municipal bond is a government. Private companies may also issue high yield bonds, however high yield municipal bonds may only be issued by state or local governments. High yield bonds are typically issued by governments to fund projects with ambiguous or unpredictable revenue. Typically, communities use traditional bonds to finance infrastructure projects like roads and schools. They save high yield instruments, meanwhile, for more speculative endeavours.

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