On March 19, 2012, the Securities & Exchange Commission
issued an Investor Bulletin to help educate investors on Municipal Bonds.
Municipal bonds (muni’s) are debt securities issued by
governmental agencies like cities & counties, often times to fund projects like building schools and highways.
There are two common types: General Obligation Bonds which are not secured by any specific assets, but rather are backed by the issuer (ie; state, county, etc.)
Revenue Bonds which are backed, not by the government entity but by revenues from a specific project like highway tolls.
The SEC points out that muni’s are subject to the
- Call Risk-the potential for the issuer to repay
the bond before its maturity date.
- Credit Risk-the risk that the issuer may experience
financical problems that may it difficult or impossible to pay the promised
- Interest Rate Risk-the risk associated with the
fluctuation of the value of the bond in response to rising and falling interest
- Inflation Risk-If prices move up generally,
this can lead to rising interest rates which lower the value of bonds.
- Liquidity Risk-the risk that investors will not
be able to find a market for their bonds.
If you are thinking of investing in municipal bonds, you would be wise to read the entire Investor Bulletin on the SEC website.
If you have questions about the way your brokerage
account is being handled or have unexplained losses in your stock market account, please do not hesitate to contact us .
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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