27
QuizMultiple Choice

Investments — Test

Question 27 • Financial Math

Which investment option should an investor choose if they have a medium-term investment horizon and are concerned about high tax implications?

Answer
A
real estate investment
B
municipal bond fund
C
global equity fund
D
S&P 500 index fund

Explanation

A municipal bond fund is generally a good fit for an investor concerned about taxes because its interest income is often exempt from federal income tax, and sometimes state or local tax. It can suit a medium-term horizon better than stock funds or real estate, whose values may fluctuate more over shorter periods. The municipal bond fund is choice B.

AI-written and checked against the verified answer.

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