A revenue bond is backed by pledge of net revenues

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1. A revenue bond is backed by a pledge of net revenues. This indicates that:

a. All revenues are pledged to pay debt service on the bonds

b. Net revenues are pledged to pay operating and maintenance expenses

c. The first use of net revenues is to pay the debt service on the bonds

d. The issuer guarantees that net revenues from the facility will be sufficient to pay debt service on the bonds

2. A grant anticipation note is normally paid from:

a. Proceeds from the issuance of long-term bonds

b. Funds received from the federal government

c. Revenues received at a future date

d. Receipts of future property taxes

3. Which of the following municipal bonds requires a feasibility study to determine the issuer's ability to pay interest when due?

a. A special tax bond

b. A general obligation bond

c. A revenue bond

d. A revenue anticipation note

4. A municipal bond that is issued at par is later purchased at a discount and redeemed for par at maturity. The investor's profit on the transaction is taxed as:

a. Capital gains

b. Ordinary income

c. Tax-deferred interest

d. Tax-deferred capital gains

Reference no: EM131526728

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