Financial securities issued by local and state governments are classified as

A. municipal bonds

B. reserve bonds

C. state bonds

D. federal bonds

Answer: Option A

Solution(By Examveda Team)

Financial securities issued by local and state governments are classified as municipal bonds. Municipal bonds are loans investors make to local governments. They are issued by cities, states, counties, or other local governments. For that reason, the interest they pay on the bonds is tax-free.