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Definition of 'Moral Obligation Bond'
A type of revenue bond issued by a municipality or similar government body. A moral obligation bond not only gives investors the tax exemption benefits inherent in a municipal bond, but also provides an additional moral pledge of commitment against default. The issuing body's commitment is supported by a reserve fund established to meet any debt service costs the government may be unable to make.
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Investopedia explains 'Moral Obligation Bond'
It is important to note that with a moral obligation bond, the additional security provided by the government is only morally - and not legally - binding. However, the pledge is generally regarded as being as credible as a legally binding promise because the issuing government would face negative credit rating effects if it failed to honor the pledge.
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Search results for 'Moral Obligation Bond'
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http://www.investopedia.com/articles/professionaleducation/07/Series_7_municipal.asp
... Voter Approval: Required, eg by a bond referendum ... Moral obligation bonds: backed
by state legislature's assurance that, in case of a shortfall in revenues, the ...
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http://www.investopedia.com/exam-guide/series-7/municipal-securities/special-munis.asp
In this section special tax bond, special assessment bond, moral obligation bond,
advance-refunding, double-barreled bond, taxable bond, zero-coupon bond. ...
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http://www.investopedia.com/exam-guide/series-7/debt-securities/agency-bonds.asp
... 12.16 Revenue Bond Analysis; 12.17 Sources of Information. Chapter ... the federal
government's guarantee is a moral rather than a legal obligation, the yields ...
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http://www.investopedia.com/articles/07/subprime-blame.asp
... (To learn about moral debate surrounding ... together into a security, such as a
collateralized debt obligation (CDO ... Key Strategies To Avoid Negative Bond Returns. ...
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