The Advantages and Disadvantages of Tax-Free Bonds
Order ID |
53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
The Advantages and Disadvantages of Tax-Free Bonds
Tax-free bonds, also known as municipal bonds, are debt securities issued by state and local governments to finance various public projects such as schools, roads, bridges, and water and sewage systems. The interest earned on these bonds is exempt from federal income tax and, in some cases, state and local taxes as well. Tax-free bonds can provide a source of investment income for individuals looking for tax-advantaged investments. However, it is important to understand both the advantages and disadvantages of tax-free bonds before investing.
Advantages of Tax-Free Bonds:
- Tax-free income: The main advantage of tax-free bonds is that the interest earned on these bonds is exempt from federal income tax. This means that investors can receive a higher rate of return compared to taxable bonds because they are not paying taxes on the interest earned. For individuals in higher tax brackets, the tax savings can be substantial.
- Stability: Tax-free bonds are generally considered to be low-risk investments because they are backed by the full faith and credit of the issuing government. This means that, in the event of a default, the government is responsible for paying back the bonds.
- Diversification: Tax-free bonds can provide a source of diversification for individuals who are looking to diversify their investment portfolio. They can be a good alternative to traditional investments such as stocks and bonds.
Disadvantages of Tax-Free Bonds:
- Lower yields: One of the disadvantages of tax-free bonds is that they typically offer lower yields compared to taxable bonds. This is because the tax-free status of the interest earned on these bonds makes them more attractive to investors, which increases demand and drives down the yield.
- Market fluctuations: Tax-free bonds are subject to market fluctuations, just like any other investment. The value of the bonds can go up or down based on factors such as changes in interest rates, credit ratings, and supply and demand.
- Limited availability: Tax-free bonds are only available to residents of the state or municipality where they are issued. This means that individuals living outside of the state or municipality may not have access to these investments.
- Call risk: Tax-free bonds can be called, or redeemed, by the issuing government before the maturity date. This means that investors may not receive the full amount of interest they were expecting.
Conclusion: Tax-free bonds can provide a source of tax-advantaged investment income for individuals. However, it is important to understand both the advantages and disadvantages of these investments before investing. Tax-free bonds offer tax-free income and stability, but typically offer lower yields compared to taxable bonds. They are subject to market fluctuations, have limited availability, and are subject to call risk. Before investing in tax-free bonds, individuals should carefully consider their investment goals, risk tolerance, and financial situation. It is also important to consult with a financial advisor to determine if tax-free bonds are the right investment for you.
RUBRIC
QUALITY OF RESPONSE |
NO RESPONSE |
POOR / UNSATISFACTORY |
SATISFACTORY |
GOOD |
EXCELLENT |
Content (worth a maximum of 50% of the total points) |
Zero points: Student failed to submit the final paper. |
20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. |
30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. |
Use of Sources (worth a maximum of 20% of the total points). |
Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. |
5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. |
10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. |
15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. |
Grammar (worth maximum of 20% of total points) |
Zero points: Student failed to submit the final paper. |
5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors |
10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors |
15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. |
20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. |
Structure of the Paper (worth 10% of total points) |
Zero points: Student failed to submit the final paper. |
3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. |
5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper |
7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
|
|
Also, you can place the order at www.collegepaper.us/orders/ordernow / www.phdwriters.us/orders/ordernow
|
Do You Have Any Other Essay/Assignment/Class Project/Homework Related to this? Click Here Now [CLICK ME]and Have It Done by Our PhD Qualified Writers!! |
|
|
The Advantages and Disadvantages of Tax-Free Bonds
PLACE THE ORDER WITH US TODAY AND GET A PERFECT SCORE!!!