Business and Personal Finance Dictionary

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• MUNICIPAL BOND FUND
  
  Municipal bond mutual funds invest in municipal bonds. Earnings from these funds are always free of federal income tax for all shareholders in the fund. In addition, some mutual fund companies offer funds that invest exclusively in municipal bonds offered by a single state. In that case, the earnings are also free of state and local tax for residents of that state. For example, NewYorkers can buy shares of triple tax-free New York municipal bond funds and keep all of their earnings. One advantage of muni bond funds is that buyers can invest a much smaller amount of money than they would need to buy a municipal bond on their own. Another advantage of these funds is that they pay income monthly rather than semi-annually.
  
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