Question

Which of the following may describe corporate bonds but not municipal bonds? A. sinking funds B....

Which of the following may describe corporate bonds but not municipal bonds?
  • A. sinking funds
  • B. serial issues
  • C. tax-exempt interest
  • D. general obligation bonds
  • E. revenue bonds
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Answer #1

Corporate bonds are embedded with the concept of sinking funds because these are issued by the companies and they will have to be repaired by these companies so they are actively managing a sinking fund in order tto repay their debt and not falter upon it whereas municipal bonds are not associated with sinking funds because they are repaired by the government and they are having absolute certainty of being returned.

All the other features are related with the municipal bonds.

Correct answer will be option ( A) sinking funds.

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