Municipal bonds
Revenue Bond Definition
Revenue bond definition for Series 7 candidates, with exam relevance, repayment example, common mistakes, and related municipal bond practice links.
Definition
Exam relevance
Practice links
Definition
A revenue bond is a municipal bond backed primarily by income from a specific project, facility, or enterprise rather than the issuer's general taxing power.
Why it matters on the Series 7
Series 7 questions often ask you to separate the repayment source for a revenue bond from a general obligation bond. The clue is usually a toll road, airport, utility, hospital, housing project, or another enterprise that generates revenue.
Example
If a city issues bonds to build a toll bridge, debt service may be paid from bridge tolls. The bondholder is relying on project revenue, not broad property-tax backing.
Common mistakes
- Assuming all municipal bonds are backed by taxes.
- Choosing ad valorem taxes when the stem names a self-supporting project.
- Ignoring feasibility and revenue-flow risk because the issuer is a municipality.
Related concepts
- Series 7 municipal bonds
Review GO versus revenue bond repayment clues.
- Municipal practice questions
Drill GO, revenue, tax, and MSRB scenarios.
- Municipal debt chapter
Preview the handbook chapter that teaches municipal debt.
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