The reason of default risk on municipal bonds is because of ___________?
Correct answer: A. economic recession
- A. economic recession
- B. economically indexed
- C. not economically indexed
- D. active trading
Explanation
Municipal bonds can face default when recession weakens local economic activity, tax collections, and the issuer’s ability to meet debt payments. They are generally lower-risk than many corporate bonds but are not automatically default-free.
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