SIE practice questionhardMunicipal Bonds - Suitability
A high-income client wants tax-free income and is comfortable with some credit risk. Which would be MOST suitable?
- ATreasury bill
- BMunicipal bond✓ Correct answer
- CCorporate bond
- DPreferred stock
Explanation
Why B — Municipal bond
Munis offer tax-free interest and some credit risk, fitting the client’s needs. T-bills are taxable with little credit risk. Corporates and preferred stocks provide taxable income.
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