Which of the following bonding methods can back a general obligation bond?

The correct answer is that a general obligation bond can be backed by the full faith and credit of the municipality. General obligation bonds are a type of municipal bond that are issued by states, cities, or other governmental entities and are secured by the issuer's pledge to use its taxing power to repay bondholders. This means that the municipality commits to use its financial resources, including taxes, to ensure the repayment of the bond.

The phrase "full faith and credit" indicates that the municipality has both the authority and the obligation to raise taxes to meet its debt obligations, making these bonds generally considered to be very safe investments. The backing often includes a broad range of tax revenues, but the essential attribute is the issuer's strong promise to honor its commitments.

In contrast, while specific taxes like fines, sales taxes, and real estate taxes can contribute to the overall revenue stream of a municipality, they are not inherently included as backing for general obligation bonds unless specified in the bond covenant. Fines may not be predictable or reliable enough to serve as primary backing, and sales taxes and real estate taxes would typically indicate specific revenue bonds or other financing techniques rather than general obligations. Thus, the comprehensive backing by the municipality's faith and credit is the defining aspect of