Series 7 practice questioneasyDebt Securities 79
Which municipal bond is most likely to expose the investor to the alternative minimum tax?
- AA private activity bond✓ Correct answer
- BA general obligation bond financing schools
- CA Treasury note
- DA Treasury inflation-protected security
Explanation
Why A — A private activity bond
Some private activity municipal bonds may be subject to AMT for certain investors. That distinction is important when comparing after-tax yields.
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