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Question
Consider the following four investors. Rank each according to who has the most to gain from investing in 30-year tax-exempt municipal bonds. Each investor has $1000 in a savings account that he/she plans to use to buy bonds. Explain briefly why you ranked the investors this way.(a) A 20-year old college student who earns low income through working over summers and breaks. The student plans to graduate next year.
(b) The CEO of a large company who is currently in the highest tax bracket.
(c) A middle-income household saving up to move into a larger home.
(d) A 60-year old nurse who plans to retire at age 62. He uses a tax-exempt pension fund for all of his savings.
Answer
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