Municipal Securities are debt instruments most commonly issued by states, political subdivision, taxing authorities, agencies and other local government units. Individual and institutional investors incorporate municipal securities in their investment portfolios often due to their perceived level of safety and their tax advantages. Most municipal bonds pay interest that is exempt from federal taxation for the bondholder, while some bonds provide the investor with further tax exempt interest at the state and local levels. Based on these tax benefits, municipal securities are best suited for investors in a high income bracket.
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