You client is in a high marginal tax bracket. She lives in California, which also has a high state tax rate. You have determined that she should be invested in municipal bonds due to her high tax bracket. But, due to California's unstable financial situation, you recommend diversifying with municipals from other states in addition to her state of residence. Which of the following are correct with regard to tax- exempt bonds that your client might include in her portfolio? 1. They are free from state and federal income taxation II. They have default risk III. They are backed by the full faith and credit of the state in which they are issued. IV. They may not be as marketable as treasury bonds. O II and IV Ill only I and III O I, II and IV