Series 7 practice questionmediumDebt Securities — Municipal Bonds — Double-Barreled Bonds
A double-barreled municipal bond is one that is backed by:
- ATwo different municipalities jointly
- BA guarantee from both the state and federal government
- CTwo different revenue sources from the same project
- DBoth the revenue from a specific project and the full faith and credit of the municipality✓ Correct answer
Explanation
Why D — Both the revenue from a specific project and the full faith and credit of the municipality
A double-barreled bond is backed by two sources of repayment: the revenue from a specific project (like a toll road) and the general taxing power of the issuing municipality. If the project revenue is insufficient to meet debt service, the municipality's taxing authority serves as a backup. These bonds are analyzed and traded as GO bonds because they have the additional security of the tax backing.
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