Question

The principal advantage of purchasing a variable rate municipal note is the fact that the: A interest rate can be expected to remain fairly stable B market value can be expected to remain fairly stable C marketability risk can be expected to be lower D credit risk can be expected to be lower Review

Answer 1

Answer:

B market value can be expected to remain fairly stable

Explanation:

Given that variable-rate municipal note is a long-term municipal bond that in which investors are offered to possess or buy using the money market funds.

For investors, there are a lot of advantages in purchasing variable rate municipal notes, some of which are:

1. market value can be expected to remain fairly stable

2. It is not taxable from federal tax

3. It has a low correlation with stocks and bonds

4. It has credit enhancement to mitigate the risk

Hence, the correct answer is that "market value can be expected to remain fairly stable"