SIE Exam Question 195: Answer and Explanation

Question: 195

Municipal bonds backed by the full faith and credit, and taxing power, of the issuer are called ______________.

• A. Revenue bonds
• B. General obligation bonds
• C. Agency bonds
• D. Treasury notes

Correct Answer: B

Explanation:

Municipal bonds backed by the full faith and credit, and taxing power, of the issuer are called general obligation bonds. A revenue bond is a type of municipal bond that is backed by the future income of a specific municipal project that generates revenue. Agency bonds are issued by either an agency of the US government (other than the Treasury) or a government-sponsored enterprise (GSE) and may not be fully guaranteed. Treasury notes are bonds issued by the US Treasury and are backed by the full faith and credit of the US government.