Question

All the following investment instruments produce the same rate of interest. Which could be most advantageous for ia taxpayer residing in a state with a high state income tax rate?
A. Certificate of deposit

B. Commercial bond

C. U.S. Treasury note.

D. Municipal bond issued in the taxpayer's state of residence.

Answer 1

Answer:

D. Municipal bond issued in the taxpayer's state of residence.

Explanation:

Municipal bond -

It is the debt security , which is furnished by a country or any municipality , in order to finance the capital expenditure , like the construction of hospitals , school , bridges and highways , is referred to as the municipal bond.

These bonds are free from the federal taxes , local and state taxes , therefore is fruitful for people with high income tax brackets.

Hence, from the given statement of the question ,

The correct option is Municipal bond .