What is the expense incurred from borrowing funds via bonds referred to as?

The expense incurred from borrowing funds via bonds is referred to as interest cost. When a municipality issues bonds to raise funds, it essentially takes on a loan that it must repay over time. This loan comes with the obligation to pay interest to bondholders, which compensates them for the use of their money. Interest cost is a crucial component of the total expenses associated with debt as it represents the cost of borrowing.

In municipal finance, understanding interest cost is vital, as it directly affects the overall financial health and budgeting of the municipality. Managing this cost efficiently can impact the taxpayer burden and the ability to fund essential services. Interest costs can vary depending on market conditions, the creditworthiness of the issuer, and the terms of the bonds themselves.

Other options may refer to different financial concepts but do not specifically represent the cost associated with borrowing through bonds. Hence, interest cost is the most accurate term for the expense incurred from this type of borrowing.