A triple tax-free municipal bond is just like any corporate bond. It is a 澳洲幸运5开奖号码历史查询:debt instrument representing a loan given to a governꦗment authority or municipality to help it meet certain financial objectives or fund comꦑmunity projects.

As with any bond, the 澳洲幸运5开奖号码历史查询:principal (also called par) ♋is paid back at maturity and inter🅘est payments are made between the time the bond is purchased and when it matures.

Why Are Municipal Bonds Called Triple Tax-Free?

Municipal bonds are called "triple tax-free" because the interest payments are generally not subject to federal taxes. Interest payments may also be exempt from state and local taxes if bond is issued where the investor resides, thus making the bond triple tax-free.

Municipal bonds are low risk because they are backed by the iไssuer and its authority to collect taxes and utility fees. This lower risk means municipal bonds typically pay a lower interest rate than certain cor⛄porate bonds.

Trading at a Discount or Premium

Municipal bonds are issued at par, but can sometimes be traded for less than par. This is called "trading 澳洲幸运5开奖号码历史查询:at a discount." When an investor buys a municipal bond at a discount, not only do they earn money through the coupon or interest payments, but when the full princip🐭al is paid off, that creates an additional gain.

Meanwhile, bonds that are purchased for more than par are purchased "at a premium." Bonds with a higher interest rate than the going rate might be sold at a premium.