GAC GAC Debt Management & Capital Financing

Question 1

Which type of municipal bond is backed solely by the issuing government's pledge of its full faith, credit, and taxing power?

Accepted Answer

General obligation bond

Answer

Revenue bond

Answer

Special assessment bond

Answer

Moral obligation bond

Question 2

A revenue bond issued by a municipal water utility would typically be repaid from:

Accepted Answer

User charges collected from water customers

Answer

General property tax collections

Answer

Federal grants

Answer

State income tax allocations

Question 3

Under GASB standards, long-term debt of a government is reported in which financial statement?

Accepted Answer

Statement of Net Position (government-wide)

Answer

Governmental fund balance sheet only

Answer

Budgetary comparison schedule

Answer

Notes to the financial statements only

Question 4

A government issues $10 million in bonds at a premium. What does a bond premium indicate?

Accepted Answer

The stated interest rate is higher than the market interest rate

Answer

The stated interest rate is lower than the market interest rate

Answer

The bonds were issued below par value

Answer

The government has a poor credit rating

Question 5

Which federal law requires state and local governments to obtain voter approval before issuing most general obligation bonds?

Accepted Answer

State constitutional and statutory debt limitation laws

Answer

The Securities Exchange Act of 1934

Answer

The Truth in Lending Act

Answer

GASB Statement No. 34

Question 6

Debt service coverage ratio is an important metric for revenue bond issuers because it measures:

Accepted Answer

The ratio of net revenues available to required debt service payments

Answer

The percentage of debt paid off in the current year

Answer

The total outstanding principal balance relative to assessed property value

Answer

The government's credit rating as assigned by a rating agency