Practice Quiz

FINRA Series 7

Category - Series 7

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A revenue bond is issued by a state agency. The state legislature is granted authority to apportion money to support the debt services if necessary, but is not legally obligated to do so. What type of bond is this?
  1. limited tax
  2. double-barreled
  3. Series 8
  4. moral obligation
Explanation
Answer: D - moral obligation. The lack of a legally binding obligation removes the issue from the general obligation category. Although defaults are possible, it is usually held that no state legislature would allow a moral obligation issue to default.
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