Which of the following obligations has interest that is exempt from California tax?

The obligation that has interest exempt from California tax includes California Municipal Bonds and U.S. Treasury Bills. California Municipal Bonds are issued by state or local governments within California, and the interest earned on these bonds is typically exempt from state taxes as it is intended to encourage investment in local infrastructure and community projects. Similarly, U.S. Treasury Bills (like other federal obligations) are exempt from state taxation due to federal supremacy in matters of taxation.

This combination of options highlights the distinction between different types of securities and their tax implications at the state level. While California Municipal Bonds provide tax relief to investors within the state, U.S. Treasury Bills receive the same exemption as a result of being obligations of the federal government. Thus, both types of bonds enjoy the same tax benefit, making the answer encompassing both these types appropriate.

It’s important to note that other obligations, such as Federal Government Bonds, may not share the same tax-exempt status, particularly regarding state income tax, emphasizing the unique benefits of municipal and federal securities in this context.