Certified Government Financial Manager (CGFM) 2026 – 400 Free Practice Questions to Pass the Exam

Revenue bonds are specifically designed for financing revenue-generating projects, such as toll roads, bridges, and utility systems. The key characteristic of revenue bonds is that their repayment is tied directly to the income generated from the specific project they finance. This means that if the revenue from the project is insufficient, the issuer is not obligated to use general funds or tax revenues to cover the bond payments.

In contrast, general obligation bonds rely on the issuing government's taxing power to repay bondholders, ensuring a broader financial backing. Serial bonds are a form of debt that is repaid over time in installments but does not inherently limit repayment to a revenue stream. Government bonds may have various structures and repayment mechanisms, which do not necessarily tie repayments to specific revenue sources.

Thus, the primary distinction that makes revenue bonds unique is their reliance solely on the revenue generated by the funded project for their repayment, which is essential for understanding the risk and investment potential associated with these financial instruments.