A Reason Why a Municipality Would Want to Issue a Taxable

Multiple Choice

A reason why a municipality would want to issue a taxable municipal bond and thereby have to pay a higher yield (than if it issued a tax-exempt municipal bond) is because ________.

A) there are few activities that municipalities could finance by issuing tax-exempt municipal bonds.
B) the U.S. income tax code imposes restrictions on arbitrage opportunities that a municipality can realize from its financing activities.
C) municipalities view their potential investor base as solely U.S. investors.
D) All of these