Moodys has a separate ratings scale for municipal bonds, Ask an Expert

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Moody's has a separate ratings scale for municipal bonds. Here is Moody's definition of its Aaa rating for municipal bonds: "Issuers or issues rated Aaa demonstrate the strongest creditworthiness relative to other US municipal or taxexempt issuers or issues."

a. What is a municipal bond?

b. Why might Moody's want to have a separate ratings scale for municipal bonds, and why might those ratings be based on creditworthiness relative to other bond issuers?

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