Obligation Bond

Obligation bond can be defined as a municipal bond. This kind of municipal bond is used to secure a mortgage over the properties or any other physical asset that can be liquidated in near future. The objObligation bond can be defined as a municipal bond. This kind of municipal bond is used to secure a mortgage over the properties or any other physical asset that can be liquidated in near future. The objective of this bond is to defend the liquidation of the assets or other physical properties. The face value of the bond is greater than the current market value of the physical properties and assets. When a borrower purchases an obligation bond it becomes the personal, moral and legal obligation of the borrower to compensate the lender. The compensation is for the costs regarding the excess of the value of the property that is mortgaged or the physical assets that is mortgaged. The examples of these costs can be given as the closing costs or the transaction costs. In other words we can explain that obligation bond is used and secured by the government to use the available resources in a legal manner. These resources also include tax revenues that are used to repay bond holders. The examples of general obligation pledge by the government are to levy a property tax obligation so that you can meet the debt service requirement and payments. Thus obligation bond can be termed as a fund raising debt instruments that is used by the government to raise fund for the public. The objective of the general obligation bond is to raise funds for those projects that won’t be able to raise revenue directly. ective of this bond is to defend the liquidation of the assets or other physical properties. The face value of the bond is greater than the current market value of the physical properties and assets. When a borrower purchases an obligation bond it becomes the personal, moral and legal obligation of the borrower to compensate the lender. The compensation is for the costs regarding the excess of the value of the property that is mortgaged or the physical assets that is mortgaged. The examples of these costs can be given as the closing costs or the transaction costs. In other words we can explain that obligation bond is used and secured by the government to use the available resources in a legal manner. These resources also include tax revenues that are used to repay bond holders. The examples of general obligation pledge by the government are to levy a property tax obligation so that you can meet the debt service requirement and payments. Thus obligation bond can be termed as a fund raising debt instruments that is used by the government to raise fund for the public. The objective of the general obligation bond is to raise funds for those projects that won’t be able to raise revenue directly.

Other Related Accounting Articles:

• Bond Power
• Bond Covenant
• Fixed Rate Bond
• Bond Yield
• Flat Bond
• Amortizable Bond Premium
• Accumulation Bond