A Reason Why a Municipality Would Want to Issue a Taxable

question 6

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

---

Definitions:

Government Regulation

Rules or directives established by authorities designed to control or govern conduct within a particular domain.

Organizations

Entities formed for a specific purpose, comprising of individuals working together under a defined structure to achieve common goals.

Culture

The sum of attitudes, customs, and beliefs that distinguishes one group of people from another.

Shared Values

Fundamental beliefs or principles that are held in common by a group, organization, or community, facilitating cohesion and cooperative action.