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Bonds 208: General Obligation Bonds

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1.
Individuals who want to invest in general obligation municipal bonds will need at least $5,000 to get started.
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False. By purchasing shares in a pool of bonds, such as a mutual fund or unit investment trust, it is possible to invest in general obligation bonds for less than the typical face-value price of $5,000.
2.
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.
3.
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.
4.
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.
5.
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.