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Reading The Intelligent Investor and came across a passage (pg 48) which I felt I couldn't fully grasp. I'd appreciate it if someone could explain it using simpler language:

Toward the end of 1971 it was possible to obtain 8% taxable interest on good medium-term corporate bonds, and 5.7% tax-free on good state or municipal securities. In the shorter-term field the investor could realize about 6% on U.S. government issues due in five years. In the latter case the buyer need not be concerned about a possible loss in market value, since he is sure of full repayment, including the 6% interest return, at the end of a comparatively short holding period. The DJIA at its recurrent price level of 900 in 1971 yields only 3.5%.

What is the "latter" case here? Is everything after "In the shorter-term" referring to the 5 year government bonds that have 6% interest? Also, are the "state and municipal securities" the same thing as the "government issues"? Contrasting the phrases "shorter-term" and "latter case" seems to indicate that the author is advocating for the 8% corporate bonds in one case and the government issues in the other, but I don't see any mention of the corporate bonds...

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Toward the end of 1971 it was possible to obtain 8% taxable interest on good medium-term corporate bonds, and 5.7% tax-free on good state or municipal securities. In the shorter-term field the investor could realize about 6% on U.S. government issues due in five years. In the latter case the buyer need not be concerned about a possible loss in market value, since he is sure of full repayment, including the 6% interest return, at the end of a comparatively short holding period. The DJIA at its recurrent price level of 900 in 1971 yields only 3.5%.

What is the "latter" case here? Is everything after "In the shorter-term" referring to the 5 year government bonds that have 6% interest?

Yes, but the quote is for US Federal Government bonds.

Also, are the "state and municipal securities" the same thing as the "government issues"?

"State and municipal securities" are not the same thing as US Government Securities. State and Local are State, County, City, Town bonds.

Contrasting the phrases "shorter-term" and "latter case" seems to indicate that the author is advocating for the 8% corporate bonds in one case and the government issues in the other, but I don't see any mention of the corporate bonds...

He is saying the US Gov 5 year bonds are rock solid. There is no fear of losing money. With the corporate bonds there is no guarantee of 100% pay back, that is why the rate is higher.

  • Then do the state or municipal securities come into the picture anywhere in his commentary? – user1340033 Sep 12 '16 at 18:43

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