Suppose the city of Des Moines has a high credit rating, and so when Des Moines borrows funds by selling bonds, the city's high credit rating
A)and the tax status of municipal bonds both contribute to a lower interest rate than would otherwise apply.
B)and the tax status of municipal bonds both contribute to a higher interest rate than would otherwise apply.
C)contributes to a lower interest rate than would otherwise apply, while the tax status of municipal bonds contributes to a higher interest rate than would otherwise apply.
D)contributes to a higher interest rate than would otherwise apply, while the tax status of municipal bonds contributes to a lower interest rate than would otherwise apply.

Question

Quizplus · Accepted Answer

A high credit rating indicates lower risk, which typically results in lower interest rates for borrowers. Additionally, the tax-exempt status of many municipal bonds makes them more attractive to investors, allowing municipalities to offer lower interest rates.

Suppose the City of Des Moines Has a High Credit