SIE practice questioneasyMunicipal Bonds — GO vs Revenue
A general obligation (GO) municipal bond is backed by:
- APrivate corporations that operate within the municipality
- BThe full faith, credit, and taxing power of the issuing municipality✓ Correct answer
- CRevenue generated from a specific project such as a toll road
- DThe U.S. Treasury
Explanation
Why B — The full faith, credit, and taxing power of the issuing municipality
GO bonds are backed by the full faith, credit, and taxing power of the issuing municipality. The issuer pledges its ability to levy taxes (property taxes, typically) to pay debt service. Revenue bonds (A) are backed by specific project revenue. GO bonds are NOT backed by the U.S. Treasury (C) or private corporations (D).
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