What should the offering document (POS) convey about the issuer's authority?

The offering document, also known as a Preliminary Official Statement (POS), is a crucial resource in the issuance of municipal bonds. It serves to inform potential investors about the issuer's authority, specifically regarding the legal basis for issuing debt.

The correct choice emphasizes the necessity of explaining the legal aspects of the issuer's authority. This includes details about the legal framework within which an issuer operates, demonstrating that the issuance of debt is authorized by law and that the proper procedural steps have been followed. This information reassures investors that the issuer has the legitimate power to incur the debt and is compliant with applicable laws and regulations.

Thus, a well-articulated presentation of the issuer's authority in the offering document not only clarifies the issuer's credibility but also helps to mitigate investment risks. Investors need to have confidence that the issuer has adhered to statutory requirements and is in a position to fulfill its obligations under the terms of the bond.