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Bonds 208: General Obligation Bonds

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1.
Most general obligation bonds are purchased directly from municipalities.
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False. Most general obligation bonds are purchased on the secondary market.
2.
Municipalities may repay bondholders prior to the maturity of the municipal bonds.
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True. Municipalities may call a bond issue in order to refinance the debt at lower interest rates.
3.
General obligation bonds can be effective investments for those who seek a high degree of safety from their investments.
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True. General obligation bonds are typically highly rated for their low default risk.
4.
Which of the following is an example of an ad valorem tax?
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Property tax. This is an example of an ad valorem tax, a tax levy based on the value of property or real estate.
5.
The principal difference between general obligation bonds and revenue bonds is that _______.
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The two are backed by different kinds of collateral. General obligation bonds are backed by full faith and credit, and revenue bonds are backed by project revenue.