The state of Virginia issues a bond to raise money for improvement of the state highway system. Which of the following statements is most true?

Group of answer choices

Income from the Virginia bond is exempt from federal income tax.

Only bondholders who actually reside in the state of Virginia are exempt from federal income tax.

Income from the Virginia bond is exempt from Virginia state tax but not from federal income tax.

Income from the Virginia bond is exempt from all estate and inheritance taxes.