Final answer:
Municipal bonds are first offered to institutional investors or via a presale, then to the general public. Bondholders receive interest payments and can take legal action if payments are not made.
Step-by-step explanation:
When a new municipal bond issue occurs, the priority of who can take the bonds typically follows a set process. Initially, the bonds may be offered to institutional investors or through a presale to certain groups. After this period, the bonds are made available to the general public, including individual investors. Each bondholder who owns a bond receives interest payments and is effectively loaning money to the issuer of the bond. Should the issuer fail to make these payments, bondholders have the legal right to take action, potentially resulting in the issuer having to sell assets to meet its obligations.