Municipal bonds are debt obligations issued by states, cities, counties and other governmental entities to raise money to build schools, highways, hospitals and sewer systems, as well as many other projects for the public good.
Tax-exempt municipal bonds are among the most popular types of investments available today, and with good reason.
There are various types of bonds available in the primary and secondary bond market. Bonds can be issued by municipalities, cities, states, corporations and agencies.
When you invest in any bond, your primary concern should be the issuer’s ability to meet its financial obligations. Issuers of municipal bonds have an outstanding record of meeting interest and principal payments in a timely manner.
There are basically two types of bond yields you should know about: current yield and yield to maturity.