Products & Their RisksQuestion 97 of 398
A general obligation (GO) municipal bond is backed primarily by:
a.The full faith, credit, and taxing power of the issuing municipality
b.Revenue from a specific facility such as a toll road
c.The federal government's guarantee
d.Corporate profits of a private operating company
Explanation
A GO bond is secured by the issuer's full faith and credit, meaning its ability to levy taxes (such as property taxes) to repay the debt. Because repayment depends on taxing power rather than a single project's income, GO bonds are often viewed as relatively safe and may require voter approval.
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