Question

A retired married customer, age 73, has a portfolio that is invested in Blue Chip stocks and Treasury bonds that provides current income. The customer is concerned that he is paying a very high Federal and State combined income tax rate. An appropriate recommendation for this customer would be to diversify part of his portfolio into an investment in:

Answer 1

The answer is Municipal bonds

Step-by-step explanation:

Municipal bonds are securities(debt securities) issued by states, cities, counties etc. It is generally issued to fund capital project like construction of roads, schools etc.

Municipal bonds are generally valued for being exempt from federal, state or local taxes taxes. Hence, the reason why the customer should invest in this type of bond since the customer is being concerned about high tax that he has been paying.