Which type of bond's interest and principal payments are supported by revenues generated from the project it is funding?

The correct answer is revenue bonds, as they are specifically designed to be repaid using the income generated from the project or source that they are financing. This means that the cash flows from the project, such as tolls from a highway, fees from a utility, or charges from a public facility, directly support the interest and principal payments on the bond.

Revenue bonds are often issued for self-sustaining projects, where the revenue is projected to be sufficient to cover the debt service without needing to rely on tax revenues or other external funding sources. This makes them particularly attractive for financing projects like airports, hospitals, or water treatment facilities, where the associated revenues are fairly predictable.

In contrast, general obligation bonds are backed by the full faith and credit of the issuing municipality, relying on taxpayers' ability to pay rather than specific project revenues. IDR (Industrial Development Revenue) bonds are a type of bond that may be tied to specific projects but are typically issued to promote employment opportunities and economic development, often subject to a different repayment structure that may include various sources of revenue. I-bonds are a form of savings bond issued by the U.S. Treasury, primarily designed for individual investors and tied to inflation, not related to project financing. Thus, revenue