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Bonds 208: General Obligation Bonds

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1.
All of the following are ways to make a $1,000 investment in general obligation bonds except _______.
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Brokers. Brokers typically require minimums of greater than $5,000 to purchase general obligation bonds. The other options are general obligation bond pools that provide a much lower buy-in price.
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.
The tax status of general obligation municipal bonds makes them an undesirable investment for individuals in the higher tax brackets.
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False. The tax-free status of general obligation municipal bond interest makes these bonds desirable for those in the higher tax brackets.
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.
A municipality's full faith and credit includes municipal taxes, bond issues, and user fees.
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False. A municipality's full faith and credit includes taxation and borrowing, but not project revenue like user fees.