A municipal bond, or “muni” as it is sometimes referred to is a debt security issued by a municipality, country or state to fund its capital expenditures. It’s important to firstly say that municipal bonds are usually exempt from federal taxes and most state and other local taxes. The only consideration however is that you [...]
What is bond convexity? Bond convexity is a direct measure of the duration sensitivity of a bond when its interest rate is changing. There is one key thing to remember here, as bond yields go higher, the price of them goes lower. In essence, the relationship this statement has, between price and yield, it has [...]
What is a private activity bond? A private activity bond is a bond issued by the government to finance a private facility or project. In this case, “the government” can mean local, state, or, rarely, the federal government. According to The IRS, private activity bonds can be used for projects that fall under section 141(b)(1), [...]
A private investment bond is quite similar to a private activity bond, only here, the bond loans money to a private entity. Much like private activity bonds, private investment bonds can be used to finance any number of private projects. Private investment bonds, though, do not carry all of the stipulations that private activity bonds [...]
Private bonds are, unlike public purpose bonds, used to finance projects instead of public operations and investments. These can be used to back just about any private facility or project that requires the funding. Private bonds are quite often referred to as private purpose bonds, essentially these are the exact same thing, they are just [...]