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Municipal bonds have all of the following characteristics EXCEPT ________. a. they are issued by state and local governments b. they have no default risk

  1. Municipal bonds have all of the following characteristics EXCEPT ________.

a.

they are issued by state and local governments

b.

they have no default risk

c.

interest received is not subject to federal income tax

d.

they tend to carry lower interest rates than either Treasury or corporate bonds

  1. Mikhail purchased a corporate security that pays a fixed amount of interest each year and matures in ten years. The security is backed only by the financial reputation of the issuer. Mikhail purchased a ________.

a.

debenture

b.

mortgage bond

c.

preferred stock

d.

municipal bond

  1. Which type of security offers the highest potential for growth in capital?

a.

Common stocks

b.

Preferred stocks

c.

Bonds

d.

Money market instruments

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