Series 7: 4.11.2. Bank Qualified Bonds

Taken from our Series 7 Online Guide

4.11.2. Bank Qualified Bonds

When a bank buys a bond, it buys it with borrowed money, borrowed at an interest rate such as LIBOR. Its carrying cost is the annual interest it pays to its lender for the borrowed money. The Tax Reform Act of 1986 generally prohibits banks from deducting the carrying cost associated with the ownership of tax-exempt municipal bonds. Howeve

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