Obligation Bond

DEFINITION of 'Obligation Bond'

A municipal bond used to secure a mortgage on property or other physical assets that can be liquidated. The face value of the bond is greater than the value of the property itself.

INVESTOPEDIA EXPLAINS 'Obligation Bond'

An obligation bond creates a personal obligation on the part of the borrower to compensate the lender for costs in excess of the value of the mortgaged property or assets, such as closing costs or transaction costs.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Face Value

    The nominal value or dollar value of a security stated by the ...
  3. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  4. Closing Costs

    The expenses, over and above the price of the property that buyers ...
  5. Surrender Period

    The amount of time an investor must wait until he or she can ...
  6. Treasury Direct

    The online market where investors can purchase federal government ...
Related Articles
  1. Bonds & Fixed Income

    The Basics Of Municipal Bonds

  2. Bonds & Fixed Income

    How long will it take for a bond to ...

  3. Bonds & Fixed Income

    What determines the price of a bond ...

  4. Taxes

    Why should I keep records on my tax-exempt ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...