Series 7 practice questioneasyDebt Securities — Municipal Bonds — Revenue Bonds
Revenue bonds are repaid from:
- AGeneral tax revenues of the municipality
- BFederal grants and subsidies
- CIncome generated by the specific facility or project financed by the bond✓ Correct answer
- DThe sale of additional bonds
Explanation
Why C — Income generated by the specific facility or project financed by the bond
Revenue bonds are repaid exclusively from the income generated by the specific project or facility they finance, such as tolls from a toll bridge, fees from a water utility, or revenue from a hospital. Unlike GO bonds, they are not backed by the municipality's taxing power and do not require voter approval. The feasibility study of the project is critical to assessing revenue bond quality.
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