MYLAB ECONOMICS WITH PEARSON ETEXT -- A
MYLAB ECONOMICS WITH PEARSON ETEXT -- A
5th Edition
ISBN: 2819260099840
Author: Mishkin
Publisher: PEARSON
Question
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Chapter 13, Problem 5Q
To determine

To Determine;

Why property and casualty insurance companies have large holdings of municipal bonds and life insurance companies do not?

Context Introduction:

Municipal bonds are a type of debt issued by the state, county or any local authority to finance its capital requirement needs. They are considered to be a more stable, less risky form of bond as they are mandated by the government. To further promote investment in these, they are usually declared as tax-free. The municipality repays them using tax revenue. This is the working behind why some insurance companies are taxed while others are not.

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