PracticeQuiz content is free on an ad-supported model.

Unfortunately, we can't support ad blocker usage because of the impact on our servers. If you'd like to continue, please disable your ad blocker and reload page.

Reload page

FINRA Series 7

Category - Series 7

Start a Study Session Sign up for Question of the Day

Bubba buys a municipal bond at a discount and holds it to maturity. Which of the following is true?

interest is taxable as ordinary income
the capital gain is tax exempt
interest is tax exempt, but the capital gain is taxable
the capital gain is tax exempt, but the interest is taxable as ordinary income

Explanation

Answer: C - interest is tax exempt, but the capital gain is taxable. This happens because Bubba purchased the bond in the secondary market with a different price than the original issue face amount.

Was this helpful? Upvote!

Start a Study Session Sign up for Question of the Day

FINRA Series 7

Top questions

Related questions

Most popular on PracticeQuiz

Ad-Blocker not supported

FINRA Series 7

Top questions

Related questions

Most popular on PracticeQuiz