You are deciding to buy either a municipal bond

your city issues with a Baa rating, or a corporate

bond with a Triple-A rating. If you are concerned

about only risk, which bond should you buy?

Select an answer:

1)You could buy either bond, because both bonds have a default rate at roughly the same level.

2)You should buy the municipal bond, because a Baa rating has a default rate well below a Triple-A corporate bond.

3) You should buy the corporate bond, because it has a much higher rating.

4) You could buy either bond, because the tax benefits of both types of bonds offset any risk.

You are deciding to buy either a municipal bond your city issues with a Baa rating, or a corporate bond with a Triple-A rating. If you are concerned about only risk, which bond should you buy? Select an answer: You could buy either bond, because both bonds have a default rate at roughly the same level. You should buy the municipal bond, because a Baa rating has a default rate well below a Triple-A corporate bond. You should buy the corporate bond, because it has a much higher rating. You could buy either bond, because the tax benefits of both types of bonds offset any risk