General Obligation (GO) Bonds

Read the Free Lesson → free · no signup wall

Chapters in this video

  1. 0:00 Full faith, credit, and taxing power: what backs a GO bond
  2. 1:34 Voter approval: the GO bond hurdle revenue bonds skip
  3. 2:48 Unlimited versus limited tax GO bonds
  4. 4:08 Population trends and the overlapping debt trap
  5. 5:44 Four debt ratios and net debt calculation
  6. 8:01 Rapid-fire exam recap

What this video covers

  • Why GO bonds require voter approval but revenue bonds do not, and how exam writers bait you with hospital-fee versus school-tax scenarios
  • The difference between unlimited tax GO bonds (no rate cap, lower risk) and limited tax GO bonds (legally capped rate, higher risk)
  • Why "unlimited" refers to taxing power, not borrowing power, and how to avoid the credit-limit trap
  • What overlapping debt includes (city, county, school district) and excludes (state debt), since states rely on income and sales taxes rather than property taxes
  • How to calculate net debt by subtracting self-supporting revenue debt from total direct debt
  • Why declining population hurts GO credit quality in two ways: shrinking the tax base while increasing per capita debt burden
  • The four analyst ratios: net debt to assessed valuation, net debt per capita, debt service to total budget, and tax collection rate

Read the full lesson, free

This video's complete written lesson is free to read in the CertFuel app, no signup wall. When you're ready to drill the topic, the full Series 7 course adds adaptive practice questions and spaced-repetition flashcards.

Start on this site: free Series 7 practice questions · Series 7 pass rate

Read the Free Lesson → free · no signup wall