Advertising yield disclosures in muni advertising should include what?

• A. The issuer's rating
• B. The state of residence of the investor
• C. The coupon rate only
• D. Yields with tax status, call features, and purchase costs disclosures.

Answer: (D)

In muni advertising, the key idea is that any yield quoted must reflect all factors that affect the investor’s actual return. That means presenting yields that account for tax status, any call features, and the purchase costs involved. Tax status matters because municipal interest is typically tax-exempt, so the shown yield should indicate whether the figure is tax-exempt and, if relevant, any tax-equivalent considerations. Call features can change the expected return if the issuer can redeem the security before maturity, so the yield should include either the yield to call or other relevant yield concepts. Purchases costs, such as underwriting discounts or sales charges, alter the cash amount paid and the real return, so the advertised yield must disclose these costs.

Because these elements directly affect the investor’s realized yield, the best answer is that yields with tax status, call features, and purchase costs disclosures are required in advertising. The other options don’t fulfill the requirement: a rating alone isn’t a yield disclosure, the state of residence of the investor isn’t a mandated disclosure in this context, and showing only the coupon rate omits the much more informative all-in yield.