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Bonds 208: General Obligation Bonds

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1.
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.
2.
All of the following are examples of taxes that municipalities may use to pay general obligation bondholders, except _______.
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User fees. User fees are not an example of the kind of taxes municipalities use to pay bondholders.
3.
Most general obligation bonds are purchased directly from municipalities.
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False. Most general obligation bonds are purchased on the secondary market.
4.
All of the following might be funded with general obligation bonds except _______.
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A pay parking ramp. This would generate revenue from user fees and would more likely be funded with revenue bonds than GO bonds.
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.