Financial Markets and Institutions (2-downloads)

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There are two types of municipal bonds: general obligation bonds and revenue

bonds. General obligation bonds do not have specific assets pledged as security

or a specific source of revenue allocated for their repayment. Instead, they are backed

by the “full faith and credit” of the issuer. This phrase means that the issuer promises

to use every resource available to repay the bond as promised. Most general obliga-

tion bond issues must be approved by the taxpayers because the taxing authority

of the government is pledged for their repayment.