A municipal bond is issued with a covenant that states "if revenue collections are insufficient, the state legislature has the authority, but not the obligation, to make an annual apportionment of funds necessary to meet debt service requirements." This is a:

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Cali Mueller

15 August, 02:53

A municipal bond is issued with a covenant that states "if revenue collections are insufficient, the state legislature has the authority, but not the obligation, to make an annual apportionment of funds necessary to meet debt service requirements." This is a:

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Gabriella Clark · Answer 1

Moral obligation bond

Explanation:

Moral obligation bond is defined as a revenue bond that is issued by a municipality or by some other government body.

The benefits of moral obligation bonds are tax exemption and a moral pledge that there will be no default on the bond.

Usually a reserve fund is established in case the issuing body is unable to meet its debt obligations.

In this scenario the bond is issued with a covenant that states "if revenue collections are insufficient, the state legislature has the authority, but not the obligation, to make an annual apportionment of funds necessary to meet debt service requirements."