The correct answer is C. Municipal bonds.
Municipal bonds are a type of debt security issued by state and local governments to finance public projects such as schools, roads, and hospitals. They are exempt from federal income tax, and in some cases, state and local income tax as well. This makes them a popular investment for individuals in high tax brackets.
U.S. Treasury bonds are debt securities issued by the U.S. government. They are considered to be one of the safest investments available, and they are backed by the full faith and credit of the U.S. government.
Mortgages are loans that are secured by real estate. They are typically issued by banks and other financial institutions.
Corporate bonds are debt securities issued by corporations. They are not exempt from federal income tax, but they may be exempt from state and local income tax.
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