Bonds-municipal. Bonds issued by state and local governments and governmental units are generally referred to as municipals or tax-exempts, since the income from these bonds is largely exempt from federal income tax. Tax-exempt bonds are attractive to individuals in higher tax brackets and to certain institutions.
There are many different issues and the newspapers generally list only a small number of actively traded municipals.
The trading takes place in a vast, specialized over-the-counter market. As an offset to the tax advantage, interest rates on these bonds are generally lower than on U. S. government or corporate bonds. Quality is usually high, but there are variations according to the financial soundness of the various states and communities. 4.4