Municipal Bond Glossary
Definitions of municipal bond investment terms
Many of the following definitions of
municipal bond investment terms are used somewhere on this
Investing Tax Free site, and all are used out there in the fast
paced world of investing, whether it is a tax free investing or
other types of investing. Think of this as your place to get up
to speed on financial and investing jargon! This municipal
bond glossary and definitions of investment terms is for
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Interest - Interest earned since the last
interest payment date. Accrued interest on bonds purchased in
the secondary market is payable by the buyer of a bond to the
seller. Municipal bonds trade "plus accrued interest."
Tax - A tax based on the value (or assessed
value) of property.
Tax - (or AMT) A federal tax aimed at
ensuring that wealthy individuals, trusts, estates and
corporations pay at least some income tax.
AMT Bond- (or
AMT-Exposed Bond) A private activity bond issued after August
7, 1986, the interest from which is a preference item to be
included in calculations of personal alternative minimum
Basis Point - A
shorthand reference to 1/100 of 1 percent (.01%) of yield.
Bearer Bond - A
bond that has no identification as to ownership. Interest is
payable upon receipt of detached semiannual coupons. Bearer
bond issuance was terminated in 1983.
Bond - A debt contract, bearing
interest, which promises to pay a principal amount due on a
Bond Anticipation Note - A
municipal note issued in anticipation of later issuance of
bonds, usually from the proceeds of the sale of the bonds
anticipated or of renewal notes.
Book-Entry Bond - A
bond that is held by a depository which remits interest and
principal payments to owners as due. Beneficial ownership is
evidenced by book entry only. Today, most bonds are issued in
book entry form.