Define the regulation risk - non-systematic risk, Risk Management

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Define the Regulation Risk - Non-Systematic Risk

Some  investments  can  be  comparatively attractive  to  other investments  due to certain  regulations  or  tax  laws  which give  them  an advantage of some kind. Municipal bonds, for instance, pay interest that is exempt from local, state and federal taxation. As a result of that specific tax exemption, municipals can price bonds to yield a lower interest rate since net after-tax yield may still make them attractive to investors.

 


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