In a Bond Covenant, a City Agreed to Create and Maintain

question 9

Multiple Choice

In a bond covenant, a city agreed to create and maintain a $2 million reserve. These funds can be used

• A) Only to make the final year's interest and principal payments on the bonds.
• B) Only to make the interest and principal payments on the bonds in a year in which the city is unable to make them from other resources.
• C) To make either the final year's interest and principal payments on the bonds or to make the payments in any year that the city is unable to make them from other resources.
• D) By the city as it chooses since the funds legally belong to the city.

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