SIE practice questioneasyMunicipal Bonds (GO vs Revenue)
A city issues a bond backed by the full faith and credit of the municipality. What type of bond is this?
- ARevenue bond
- BGeneral obligation bond✓ Correct answer
- CIndustrial development bond
- DTax anticipation note
Explanation
Why B — General obligation bond
General obligation (GO) bonds are backed by the full faith and credit of the municipality, whereas revenue bonds are backed by specific project revenues. Industrial development bonds and tax anticipation notes are distinct types of municipal securities with different backing.
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