Series 7 Exam Question 31: Answer and Explanation

Question: 31

A municipal special assessment bond is

• A. a bond backed by charges on the benefited property
• B. a bond backed by a private user
• C. a bond backed by excise taxes
• D. also known as a LTGO

Correct Answer: A

Explanation:

A. Special assessment bonds are issued to fund projects in which only a certain amount of people in the municipality benefit. These could be issued for projects such as adding new sidewalks, new streetlights, a new or upgraded playground, and so on. As such, only the people living in the properties that benefit from the upgrades are charged higher property taxes to back the bonds issued to pay for the upgrades.