Series 7 practice questionmediumDebt Securities — Municipal Bonds — Industrial Development Bonds
Industrial development revenue bonds (IDRBs) are issued by municipalities to:
- AFund general public infrastructure such as roads and bridges
- BFinance facilities for private corporations to attract economic development✓ Correct answer
- CProvide emergency funding for natural disasters
- DPurchase US government securities
Explanation
Why B — Finance facilities for private corporations to attract economic development
Industrial development revenue bonds are issued by municipalities on behalf of private companies to finance construction of factories, warehouses, or other facilities that promote local economic development. Although issued by the municipality, the bonds are backed by the lease payments or revenues of the private corporation using the facility, not by the municipality's taxing power.
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