Unit 2 6 Municipal Bonds

Question 1

Who issues Municiple Bonds? Be careful it’s a “trick question”.

Answer 1

Issued by any other government entity EXCEPT the federal government.

Question 2

What are the 2 types of Muni’s (for the test) bonds?

Answer 2

1- General Obligation - commonly know as GO Bond.
Require voter approval.
Backed by taxes (full faith & credit of issuing Municipality. Issued to e.g., build a courthouse or jail or city hall
2- Revenue bonds - no voter approval required because they’re not backed by taxes, but by revenue of a financed project. Ex: Build a toll road, or toll bridge, or airport. They use the proceeds of the bond issue to build the project, then people are charged a fee, (tolls) to use the finished project.