Final answer:
Bonds issued with only the potential financial support of the proposed project mean that the funds raised through the bond issuance will be used exclusively for the proposed project and repayment will be supported by the cash flows generated by that project.
Step-by-step explanation:
In the context of finance, bonds are issued with only the potential financial support of the proposed project. A bond is a financial contract where a borarower agrees to repay the borrowed amount and also an interest rate over a period of time in the future. These bonds can be issued by firms or various levels of government, such as municipalities, U.S. states, or the federal government through the U.S. Department of the Treasury.
When a bond is issued for a specific project, it means that the funds raised through the bond issuance will be used solely for the proposed project and the repayment of the bond will be supported by the cash flows generated by that project. The bondholders invest in the bond based on their confidence in the success and profitability of the project.
For example, if a city wants to fund the construction of a new bridge, they can issue municipal bonds specifically for that project. The bondholders who invest in these bonds are essentially providing financial support for the bridge project by lending their money with the expectation of receiving interest payments and eventually the repayment of the principal amount. The bondholders' return on investment is tied to the success of the project.