This exhaustive yet accessible treatise on municipal bonds deserves the attention not only of investors but also of restive taxpayers and any elected officials who may have missed the message of Proposition 13. At present, report the authors (respectively, an ex-Fortune editor who now is a professor of management at NYU and a brokerage-house executive), municipal debt tops $265 billion--quadruple the amount outstanding in 1960. The profligacy of politicians and inflation apart, the authors attribute this growth in large measure to the fact that interest payments on municipal bonds are exempt from federal (and frequently local) taxes, a feature that appeals to institutional as well as individual investors. They discuss in detail the many sorts of tax-exempt securities extant--noting, however, that there are only two basic types: general obligations (backed by an issuer's taxing powers) and revenue bonds (secured by the income from a toll road, stadium, power station, or other facility). Following Proposition 13, say the authors, municipalities will probably reduce their GO borrowing, relying instead on user charges or revenue issues to finance library, sanitation, recreation, and related community programs. Covered as well are the market characteristics of tax-exempts--which, as fixed-income securities, respond to interest-rate fluctuations--and the factors involved in analyzing issuers' creditworthiness: cash flow, tax base, population shifts, pension obligations, and the like. From the failure of the principal rating services to anticipate New York City's plunge, it appears that even the pros have much to learn about the inner world of municipal finance. As sound as a triple-A bond.