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Some Important Things to Know Before Investing in Municipal Bonds

Taxation of Municipal Bond Interest

The interest on tax-exempt municipal bonds is exempt from federal income taxation, an important consideration to bond buyers, especially those in the higher income tax brackets. State tax treatment is an important consideration to bond buyers as well, since the interest on tax-exempt municipal securities is exempt from state income taxes in the state where they are issued.  Most municipal bonds are tax-exempt, but some are not (i.e., they are fully taxable). The offering document for a bond issue (its “Official Statement”) will state if the bonds are tax-exempt or taxable. In general, if the bonds are issued by a municipality for a public purpose (e.g., to construct a public school building) they will be tax-exempt. If the bonds are issued by a municipality for “private activity” purposes, they will be taxable bonds and the income from these municipal bonds will be fully taxable for both state and federal income tax purposes.

Current rules on the exemption of municipal bond interest varies state-to-state. In most states, bonds issued by the state or one of its political subdivisions are exempt from personal income taxation, but not the interest on bonds issued by another state or one of its political subdivisions.

Serial Bonds
Serial bonds allow issuers (i.e., municipalities) to structure their debt by issuing bonds in varying principal amounts with consecutive maturity dates. For example, an issuer might sell $1,000,000 in bonds with annual maturities of $100,000 per year for 10 consecutive years. As serial bonds mature the issuer is able to repay the total principal over time (rather than all at once), and as such will be better able to match revenue projections with debt service payments.

Term Bonds
Single maturity or “term bonds” are debt instruments where the entire principal amount of the bond is paid on the maturity date. For example, an issuer might sell $1,000,000 in bonds, all stated to mature in 20 years. Prior to the maturity date, however, there may be mandatory sinking fund redemptions of this bond. A schedule of the mandatory sinking fund redemptions will be shown in the official statement for the bond issue. Thus, portions of this 20-year bond will be retired before the 20th year in amounts and on the dates set forth in the official statement.


Par Bonds, Discount Bonds and Premium Bonds
A par bond is a bond sold at its face (or “par”) amount (e.g., a $5,000 par bond would be sold for $5,000). A discount bond is a bond with a below-market coupon rate that is sold at a price less than par, and a premium bond is a bond with an above-market coupon rate that is sold above par. The decision to issue discount or premium bonds (or some combination of both) is made by the underwriter of the bond issue for marketing purposes. After the initial offering, changes in market rates will affect the prices of bonds, thereby making them par, discount or premium bonds depending on their coupon rate and the market rate for the bond at the time of sale. Contact your accountant or financial advisor with respect to the taxation of the discount or premium on your bonds.


Callable Bonds
Municipal bonds providing for the optional redemption or “call” by the issuer prior to its stated maturity date are known as callable bonds, and are generally callable at any time upon 30-days notice after a certain numbers of years have elapsed from the date they were issued (typically, 10 years). The decision to call the bonds is solely at the option of the municipal issuer. If the issuer decides to call its bonds, the owner will be paid back at that time, and no future interest payments will be received. Premiums can be applied to the early redemption of callable bonds, although most municipal bonds are currently callable at par. Thus, all or a portion of an issuer’s callable bond issue may be redeemed prior to the stated maturity of the bond issue. The official statement for a callable bond will describe the method of redemption.


Yield to Maturity and Yield to Call

The yield to maturity is the return to the purchaser of a fixed coupon rate bond at a certain price. For example, a 20-year 5.00% non-callable bond purchased at 105% of par will have a yield to maturity of 4.615% (the yield to maturity is less than the coupon rate since the purchaser is paying more than par for this bond). If the same bond was purchased at 95% of par (i.e., at a discount), its yield to maturity would be 5.412% (the yield to maturity is greater than the coupon rate since the purchaser is paying less than par for this bond). The yield to call is the return to the purchaser of a callable bond assuming it is called on its call date. For example, if the 20-year 5.00% premium bond purchased at 105% is callable in 10 years, the yield to call would be approximately 4.377% (i.e., less than its yield to maturity). When investing in bonds it is important to know the yield to maturity (YTM) or yield to call (YTC) in order to know the actual return of the investment – don’t just look at the coupon rate. Discuss this with your securities broker or financial advisor.

Credit Enhancements
Some municipal bonds are issued with “credit enhancement” which means that a third party promises to pay the principal and interest on the bond if the issuer fails to do so. Examples of such third parties are (1) a bank letters of credit, (2) a bond insurance company, (3) credit programs of federal or state governments or federal agencies, or (4) state school credit guarantees. With credit enhancement, an issuer can expect to sell its bonds at a lower yield to the investor due to the higher creditworthiness of its debt. Discuss any credit enhancements with your securities broker or financial advisor.


Zero Coupon Bonds
Zero coupon bonds are bonds that are sold at a discount with no periodic interest payments. All interest is effectively paid at maturity when the purchaser receives the full principal amount of the bond.


Capital Appreciation Bonds
Capital appreciation bonds (CABs) are bonds that are sold at a discount that provide for the reinvestment of the initial investment at a compounded rate until the maturity, at which time the investor receives the total par amount (or “future value”) of the CAB. CABs are zero coupon bonds.

Variable Rate Bonds
Variable rate demand obligations (VRDOs) are bonds where the interest rate varies, or changes periodically (e.g., weekly or monthly). VRDOs are typically sold with high minimum denominations (e.g., $100,000). The VRDO structure allows the securities to be sold at par. They are also known as “floating rate” bonds.



Stanley Stone is the president of He is a Certified Independent Public Finance Advisor (CIPFA) and an associate member of the National Association of Bond Lawyers. Stanley loves the theater and attends many plays, operas and ballets each year in New York City.

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Software, Internet sectors lead U.S. M&A deals

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Insurance Quote – Getting an Auto Insurance Quote

Getting an auto insurance quote online is a great system. One that will be in a position to have at least the payment of the amount of your policy if you’re in the right direction. It is not always a business that will make you feel the least expensive. Sometimes the larger companies can give you some fantastic deals on auto insurance.

– Insurance Quote

The best way to use the auto insurance quote system is to comparison shop. Get a company that will provide youwith an offer for its political cost, as well as several other companies. When you pull up an offer like this does not automatically on the dollar amounts, you do indeed pay to concentrate. First you need to make a few changes.

The adjustments that you need to make is concerned with the length of the policy and the deductible, which were set up. You must ensure that all quotes are to be built, enter the same decisions about these things. All measures should be run for the sameLength of time, and the deductible dollar amount should be equal.

– Insurance Quote

If these amounts is the same it is a way to equal out everything offered to them. Now you have the down payment and monthly payments that will be different. This is comparable to, if you are really the companies themselves. Making everything look the same, except those fees to who the best offer.

You can always make adjustments once you’ve found the best cost. You can depositIn many cases, the adjustment of payments you every month. Some companies give you different payment options as well. By example, 10 instead of 12 payments, or vice versa.

These are two ways you can change the amount that you have to pay each month is correct. Of course, the other that you can do that is by adjusting your deductible amount. It is true, the higher your deductible, the cheaper your policy is a total set

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Q&A: Could you summarize John Randolph Price “Abundance Book”?

Question by titacabreros: Could you summarize John Randolph Price “Abundance Book”?
This book was a favorite years ago, but I seem to forget the real meaning of “abundance”. Is it about God being your supply?

Best answer:

Answer by Oscar C
“The Abundance Book” was written by the visionary John Randolph Price, and he has a new book on CD called the 40 Day Prosperity Plan.

The visionary author of The Abundance Book, brings you a CD program that an change your life…in less than two months! As Price says, “It takes 40 days for consciousness to realize a truth. If the plan outlined in this CD is faithfully followed for 40 days, you consciousness will be changed from a vibration of limitation to one of abundance, as proven by letters from thousands of people around the world.”

This is the summary of the Abundance Book as a sort of:
The Statements of Principle: (EDITED VERSION)
1. God is my lavish, unfailing Abundance, the rich omnipresent substance of the Universe. This all-providing Source of infinite prosperity is – the Reality of me.
2. I lift up my mind and heart to be aware, to understand, and to know the Divine Presence I AM is the Source and Substance of all my good.
3. I am conscious of the Inner Presence as my lavish Abundance. I am conscious of the constant activity of this Mind of infinite Prosperity. Therefore, my consciousness is filled with the Light of Truth.
4. Through my consciousness of God, the Christ within, as my Source, I draw into my mind and feeling nature the very substance of Spirit. This substance is my supply, thus my consciousness of the Presence of God within me is my supply.
5. Money is not my supply. No person, place or condition is my supply. My awareness, understanding and knowledge of the all-providing activity of the Divine Mind within me are my supply. Therefore, my supply is unlimited.
6. My inner supply instantly and constantly takes on form and experience according to my needs and desires, and as the Principle of Supply in action, it is impossible for me to have any needs or unfulfilled desires.
7. The Divine Consciousness is forever expressing Abundance. This is its responsibility, not mine. My responsibility is to be aware of this Truth. Therefore, I am totally confident in letting go and letting God appear as the abundant all-sufficiency in my life and affairs.
8. My consciousness of the Spirit within me as my unlimited Source is the Divine Power to restore the years the locusts have eaten, to make all things new, to lift me up to the High Road of abundant prosperity. This awareness, understanding and knowledge of Spirit appear as every visible form and experience that I could possibly desire.
9. When I am aware of the Divine Presence within me as my total fulfillment, I am totally fulfilled. I am now aware of this Truth. I have found the secret of life, and I relax in the knowledge that the Activity of Divine Abundance is eternally operating in my life. I simply have to be aware of the flow, the radiation, of that Creative Energy, which is continuously, easily and effortlessly pouring forth from my Divine Consciousness. I am now aware. I am now in the flow.
10. I keep my mind and thoughts off “this world” and I place my entire focus on God within as the only Cause of my prosperity. I acknowledge the Inner Presence as the only activity in my financial affairs, as the substance of all things visible. I place my faith in the Principle of Abundance in action within me.

Of course, John Randolph Price could explain this to you more fully. Buy his CD.

Give your answer to this question below!

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Out Of This World Deal

Check out these online deals images:

Out Of This World Deal

Image by Groupon
> Here’s a picture of me redeeming my Groupon for Chabot Space & Science
> Center’s "10000 Party Under the Stars."
> Groupon-auts partying in astronaut suits: it was out of this world! 😉
> -Kim T.

From One Chocolate Lover to Another

Image by Groupon
I Gotta tell ya I love Groupons, use them all the time and look for them
Here is a picture for you…

Thanks again

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