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Interest on Bonds Issued by State and Local Governments with Good

Question 35

Multiple Choice

Interest on bonds issued by state and local governments with good credit ratings

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

Correct Answer: