Which bond issue is secured by the income from a bridge or toll road?

Which bond issue is secured by the income from a bridge or toll road?

• A. Mortgage bond issue
• B. Revenue bond issue
• C. General obligation issue
• D. Debenture issue

Answer: (B)

Revenue bonds are issued to fund facilities that will generate their own income, and the bond payments come from that dedicated revenue stream rather than the issuer’s general assets. In the case of a bridge or toll road, the toll receipts are the money set aside to cover interest and principal on the bonds, often with reserve funds as protection. This dedicated revenue source distinguishes it from other bond types. Mortgage bonds are secured by a lien on specific real estate, general obligation bonds are backed by the issuer’s taxing authority and overall credit, and debentures are unsecured and rely on the issuer’s credit without a dedicated revenue stream.

Revenue bonds are issued to fund facilities that will generate their own income, and the bond payments come from that dedicated revenue stream rather than the issuer’s general assets. In the case of a bridge or toll road, the toll receipts are the money set aside to cover interest and principal on the bonds, often with reserve funds as protection. This dedicated revenue source distinguishes it from other bond types.

Mortgage bonds are secured by a lien on specific real estate, general obligation bonds are backed by the issuer’s taxing authority and overall credit, and debentures are unsecured and rely on the issuer’s credit without a dedicated revenue stream.