Products & RisksQuestion 11 of 125
A revenue bond issued to finance a municipal water and sewer system is repaid from:
a.Ad valorem property taxes
b.User charges and fees collected from the facility's operations
c.Federal grants only
d.Sales tax collected statewide
Explanation
Revenue bonds are serviced from the income generated by the specific facility or enterprise they finance, such as user fees from a water and sewer system. Because they lack the issuer's general taxing power backing, analysts examine the project's projected revenues and any debt service coverage requirements.
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