| Abstract: | The introduction of municipal bond mutual funds in 1976 as an alternative for investors increases the importance of examining the factors that may affect the performance of municipal bond portfolios. Some sponsors of unit trusts claim that diversification across states, tax districts, and purpose of issue improves performance. This study finds only slight support for this type of diversification, and the conclusion is that the prime determinants of price volatility are maturity and risk-premium. |
