Final answer:
A general obligation bond is backed by the taxing power of the issuing municipality, not the revenue of the project it finances. Revenue bonds are the type of bonds that are repaid from the project's income. Bond repayment encompasses the original borrowed amount plus interest over time.
Step-by-step explanation:
A general obligation bond is a type of municipal bond that is not repaid from the income generated by the project it finances. Instead, general obligation bonds are secured by the full faith and credit of the issuing authority, which means they are backed by the taxing power of the issuing municipality.
Revenue bonds, on the other hand, are the ones repaid from the income generated by the specific projects they finance, such as toll roads or hospitals. As a bondholder, one may earn interest over time, which is one way to increase the amount of interest earned on one's money.
The repayment of bonds, whether corporate bonds, municipal bonds, state bonds, or Treasury bonds, includes the borrowed amount plus the agreed-upon interest rate, which is to be paid over a set period of time until full repayment is achieved. Bonds offer a means of raising financial capital for various entities and serve as investment opportunities for individuals and institutions.