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    Question

    What is a coverage that guarantees bondholders timely payment of interest and principal even if the issuer of the bonds defaults?

    A Internet Liability Insurance Correct Answer Incorrect Answer
    B Kidnap/Ransom Insurance Correct Answer Incorrect Answer
    C Municipal Bond Insurance Correct Answer Incorrect Answer
    D Gap Insurance Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    A municipal bond is a debt security issued by a state, municipality or county to finance its capital expenditures, including the construction of highways, bridges or schools. Municipal bonds are exempt from federal taxes and most state and local taxes, making them especially attractive to people in high income tax brackets.

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