Which of the following is a bond issued by municipalities to finance public projects such as roads and schools?

The correct choice is municipal bonds, as they are specifically designed to help fund public projects that benefit communities, such as roads, schools, bridges, and other essential infrastructure. When municipalities need to raise funds for these projects, they issue municipal bonds to investors, allowing the governments to borrow money at lower interest rates than other forms of borrowing.

Municipal bonds have certain tax advantages as interest income is often exempt from federal taxes and sometimes state and local taxes as well, making them an attractive investment for individuals in higher tax brackets. This tax-exempt feature also encourages more investment in public projects to foster community development.

Other options involve different types of bonds that serve different purposes. Bearer bonds are bonds that do not have a registered owner; their holder can claim ownership, but they do not directly relate to municipal funding. Revenue bonds are a subtype of municipal bonds that specifically finance income-producing projects and are repaid from the revenue generated by those projects rather than general taxation. I-bonds, on the other hand, are inflation-indexed savings bonds issued by the federal government and are unrelated to municipal financing. Understanding these distinctions is key when analyzing different types of bonds and their specific applications in the financial markets.