Question

Customer with high fed. tax bracket, 10% state tax, with a goal of preservation of capital/income and low risk tolerance. The best recommendation is:

A) Growth stocks.
B) High-yield bonds.
C) Municipal bonds.
D) Small-cap stocks.

Answer 1

For a customer with a high federal tax bracket, 10% state tax, and a low risk tolerance, the best recommendation is municipal bonds. Municipal bonds provide tax advantages and can help the investor preserve their capital and income while minimizing tax liability.

Step-by-step explanation:

The best recommendation for a customer with a high federal tax bracket, 10% state tax, and a goal of preservation of capital/income and low risk tolerance is Municipal bonds. Municipal bonds are issued by state and local governments to fund public projects, and the interest income from these bonds is typically exempt from federal income taxes. This allows the investor to preserve their capital and income while minimizing their tax liability.