SIE practice questioneasyMunicipal bonds
Which municipal bond is primarily backed by the taxing power of the issuer?
- AGeneral obligation bond✓ Correct answer
- BRevenue bond
- CZero-coupon municipal bond
- DIndustrial development bond
Explanation
Why A — General obligation bond
General obligation (GO) bonds are backed by the full faith and credit, including the taxing power, of the issuer. Revenue bonds are backed by specific project revenues, not taxes. Zero-coupon and industrial development bonds may be issued by municipalities, but their security depends on structure and revenue sources.
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