The city of Houston passed a bond issue to build a bridge over the bay.The bond was to have the interest paid by the income generated by charging drivers a toll to cross the bridge.This is an example of a ________ bond.

Question

Quizplus · Accepted Answer

This is a revenue bond because the interest and principal will be paid from the income generated by charging tolls to people who cross the bridge. Collateralized bonds are backed by specific assets, cash bonds are bonds that pay interest in the form of cash instead of being reinvested, and general obligation bonds are backed by the issuer's ability to repay, not a specific stream of revenue. None of these categories accurately describe this particular bond.

The City of Houston Passed a Bond Issue to Build