Hospital Revenue Bond

AAA

DEFINITION of 'Hospital Revenue Bond'

A type of municipal bond to support the construction of new hospitals or new equipment and upgrades for existing hospitals. The revenue created by the hospitals is then used to pay back bondholders. Generally, bondholders are paid only after the expenses of running the hospital are paid, creating risk for bondholders if the hospital is not as profitable as anticipated. Income received from a hospital revenue bond may be exempt from state, local and/or federal taxation.

INVESTOPEDIA EXPLAINS 'Hospital Revenue Bond'

As their name suggests, revenue bonds are generally backed by the revenue that the specific project is able to generate. If this revenue is insufficient, municipalities have no obligation to use other funds to pay back bondholders. This means that revenue bonds typically command higher yields, since their default risk is greater than a general obligation bond. Ratings firms evaluate a revenue bond issue and assign a ranking indicating the probability that the obligation will be paid as scheduled.

RELATED TERMS
  1. Utility Revenue Bond

    A type of municipal bond that is issued to finance utility projects, ...
  2. Revenue Bond

    A municipal bond supported by the revenue from a specific project, ...
  3. Toll Revenue Bond

    A type of municipal bond used to build a public project such ...
  4. Revdex

    A bond index that estimates the approximate yield that an investor ...
  5. Mortgage Revenue Bond - MRB

    A funding source for home mortgages. Mortgage revenue bonds help ...
  6. Bond

    A debt investment in which an investor loans money to an entity ...
RELATED FAQS
  1. How is it possible for a rate to be entirely risk-free?

    It is not possible for a rate to be entirely risk-free. The risk-free rate of return is a theoretical construct that underlies ... Read Full Answer >>
  2. How is the risk-free rate of interest used to calculate other types of interest rates ...

    The risk-free rate for bonds is used for pricing the yield spread as the difference between the interest rate on a bond and ... Read Full Answer >>
  3. What is the difference between a repurchase agreement and reverse repurchase agreement?

    A repurchase agreement, or repo, is a form of collateralized lending, while a reverse repurchase agreement, or reverse repo, ... Read Full Answer >>
  4. Which asset classes are the most risky?

    Equities is the riskiest class of assets. Dividends aside, they offer no guarantees, and investors' money is subject to the ... Read Full Answer >>
  5. How is the interest rate on a treasury bond determined?

    The yield of U.S. Treasury securities, including Treasury bonds (T-bonds), depends on three factors: the face value of the ... Read Full Answer >>
  6. Is a treasury bond a good investment for retirement?

    Individuals saving toward retirement use a variety of investments to accumulate funds over time, including stocks, bonds ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    The Basics Of Municipal Bonds

    Investing in these bonds may offer a tax-free income stream but they are not without risks.
  2. Bonds & Fixed Income

    3 Bonds You May Have Never Heard Of

    These lesser-known bonds may give your portfolio a boost when other investments products fall short.
  3. Taxes

    Avoid Tricky Tax Issues On Municipal Bonds

    Learn the rules every investor should know before buying into this "tax-free" investment.
  4. Bonds & Fixed Income

    Bond Portfolios Made Easy

    Bonds have typically been viewed as stocks' less-glamorous sidekick, but they deserve a little more respect from investors.
  5. Options & Futures

    Municipalities Free Up Cash With Chapter 9

    Find out what happens to municipalities when they need money, but have no other option than bankruptcy.
  6. Mutual Funds & ETFs

    Pros & Cons Of Bond Funds Vs. Bond ETFs

    Understanding the pros and cons of bond funds and bond ETFs will help you choose the instrument that is best for building your diversified bond portfolio.
  7. Mutual Funds & ETFs

    Pros and Cons: Preferred Stock ETFs vs. Bond ETFs

    A look at the differences between preferred stock ETFs and bond ETFs and when you should invest in one over the other.
  8. Bonds & Fixed Income

    African Sovereign Debt: Risks and Rewards

    African sovereign debt offers high yields and upside — if one has the stomach for the risk.
  9. Economics

    A Risky Maneuver To Jumpstart Japan's Economy

    Japan's government and the Bank of Japan are buying large amounts of government bonds in an effort to spark economic activity, but there are great risks.
  10. Bonds & Fixed Income

    Understanding Negative Rates Of Europe's Central Banks

    We are currently seeing negative central bank deposit rates and government and corporate bonds with negative yields, but there are investors buying into these securities. Why?

You May Also Like

Hot Definitions
  1. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  2. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  3. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  4. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  5. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
  6. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
Trading Center