Municipal Bond
A bond issued by a state, city, county, or other local government entity, or by an authority on its behalf. Interest is exempt from federal income tax (and often from state income tax for in-state residents), which is the structural reason munis exist. General-obligation munis are backed by the issuer's taxing power; revenue munis are backed by a specific project's revenue. Munis make the most sense in a taxable account at a high marginal tax rate; in tax-advantaged accounts the federal exemption is wasted.
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Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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