Products & Their RisksQuestion 161 of 398
The ability of a city to repay a general obligation bond depends most directly on its:
a.Revenue from a single toll bridge
b.Federal grant allocation
c.Taxing power and overall financial health
d.Corporate sponsorship agreements
Explanation
Because a GO bond is backed by the issuer's full faith and credit, its repayment depends on the municipality's power to levy taxes and on its overall fiscal condition. Analysts review property values, tax collection rates, debt levels, and the local economy. Revenue from a single facility backs a revenue bond, not a GO bond.
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