Write a response and give additional knowledge to "Municipal bonds "Muni's" are issued by our local city, state, or county. The funds can used for many different purposes such as public water works, schools, police, road work or recreational projects. Muni's can carry the benefit of no state or federal taxes. However, the yields are typically lower compared to Treasuries or corporate bonds. There are two types of Muni's which are general obligation(GO Bonds) which are backed by the state or city's tax payers. Then there are Revenue Bonds which are backed by the revenue of a specific project. Muni's are not just investments for the wealthy. Yes, wealthy investors do benefit from them as they are risk averse and want to protect their wealth. However, there are thousands of Muni's for purchase that retail investors can buy for as little as $1k face value increments. There is less trading liquidity amongst the Muni's compared to a US Treasury. Depending how the funds are being used for will almost always create controversy. You can't make all the taxpayers happy even if it may be for a good cause. A stadium may attract unwanted night life even though it creates hundreds.

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Municipal bonds often referred to as Munis indeed play a crucial role in financing various public projects at the local state or county level These bo... View the full answer