A municipal bond fund (commonly called a "muni fund") is a type of bond issued by a local city, county, or state government, or a particular agency therein (e.g., public school districts, publicly owned airports, and seaports). The methods of issuing these bonds differ from state to state. Municipal bond funds are considered to be attractive to investors because they are not liable to federal taxation. However, their potential profit is affected by the tax rates imposed upon the entity issuing the bond. In addition, because of the federal tax exemption, they are usually subject to lower rates of interest. When a municipal bond fund is issued, investors make cash payments to that particular entity. In exchange, the party issuing the bond promises to pay back the bond over an agreed-upon period. While some are paid back within a few months, most municipal bond funds are paid back over several yearsﾗeven decades. The potential risk for investors is the reliability of the bond issuer to make all payments, in time and in full. Investors are encouraged to check with an independent reviewer or rating agency.