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A municipal bond or "muni" is a bond issued by a
state, city or other local government. Potential issuers
(municipalities) of municipal bonds include cities, counties,
redevelopment agencies, school districts, publicly owned airports
and seaports, and any other governmental entity. They are generally
issued to raise capital for their day-to-day activities and for
specific projects that they might be undertaking. Municipal bonds
are guaranteed by a local government. Interest income received by
holders of municipal bonds is often exempt from federal tax.
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