Definition of Revenue bond

Revenue bond is a municipal bond that has been issued to finance a revenue-producing project such as a toll bridge. The proceeds from the issuance of the bond will construct or repair the facility, and the debt payments will be supported by revenue generated by the facility.

Applying "Revenue bond" to Securities Exams:

When a bridge or a tunnel needs to be built or repaired that work will often be financed by issuing a revenue bond. The interest and principal payments will be supported by the tolls or fees collected by the project. If the bond issue is being sold to build a new facility that project will be subject to a feasibility study. A feasibility study will determine if the project can be built and if it can be operated economically in light of competing facilities.

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