Products & Their RisksQuestion 102 of 398
A city wants to finance a new municipal water and sewer system, and plans to repay bondholders only from the fees charged to users of that system. Which type of bond is this?
a.A revenue bond
b.A general obligation bond
c.A U.S. Treasury bond
d.A corporate debenture
Explanation
Because repayment comes solely from the user fees generated by the water and sewer facility rather than from tax revenue, this is a revenue bond. A general obligation bond would instead be backed by the city's taxing power and typically require voter approval.
Law Reference: MSRB RulesPractice all 398 questions free — no signup required.
Related questions on this topic
- A primary tax advantage of most municipal bonds is that their interest is:
- For which investor is a tax-exempt municipal bond generally MOST suitable?
- A municipal bond described as 'triple tax-exempt' provides interest that is free from:
- A key tax feature of a direct participation program (DPP) is that it:
- In a direct participation program organized as a limited partnership, the limited partners:
- Which of the following is a common type of direct participation program?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review