Question
A local government's tax base is broad and stable, but one project performs poorly. Which bond type is better insulated from that project's weakness?
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Answer
General obligation bond.
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Question
A toll road's traffic projections weaken sharply. Which municipal bond type is more directly pressured: GO or revenue?
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Answer
Revenue bond.
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Question
Why are developed-market sovereign bonds often treated as the benchmark for lowest domestic credit risk?
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Answer
They have strong economies, taxing power, and often issue in own currency.
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Question
How does a general obligation bond differ from a revenue bond in credit support?
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Answer
GO bonds use full taxing power; revenue bonds rely on project revenues.
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