Certified Government Financial Manager (CGFM) 2025 – 400 Free Practice Questions to Pass the Exam

Revenue bonds are a type of municipal bond that are specifically backed by the revenue generated from a particular project or source. This means that the funds used to pay principal and interest on these bonds come from the income generated by the assets the bonds are issued to finance, such as tolls from a toll road, fees from a utility service, or rents from a property. As a result, investors looking at revenue bonds are primarily assessing the viability and revenue-generating capacity of the project rather than relying on the general taxing power of the municipality.

Given this characteristic, it is clear why the statement regarding them being backed by a specific source of financing is accurate. It emphasizes the project-specific nature of revenue bonds, distinguishing them from general obligation bonds, which are backed by the full faith and credit of the issuing entity. Other options do not accurately reflect the fundamental nature of revenue bonds—such as their interest rates and repayment structures, which can vary.