You Hold Bonds Issued by the City of Sacramento, California

You hold bonds issued by the city of Sacramento, California. The interest you earn each year on these bonds

A) is not subject to federal income tax and so these bonds pay a higher interest rate than otherwise comparable bonds issued by the U.S.government.
B) is not subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the U.S.government.
C) is subject to federal income tax and so these bonds pay a higher interest rate than otherwise comparable bonds issued by the U.S.government.
D) is subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the U.S.government.