Which statement describes the use of bond or note proceeds?

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Multiple Choice

Which statement describes the use of bond or note proceeds?

Bond or note proceeds are restricted cash meant to fund the specific project the issue was sold for, plus the costs of issuing and marketing the bonds. This ensures the debt is used for a capital purpose and that the issue covers its own related expenses, as outlined in the bond resolution. Therefore, the proceeds must be used for the loan purpose plus the costs of issuing and marketing. Using them for other projects, private ventures, or to cover operating deficits would violate the authorized use and the nature of debt financing.

Bond or note proceeds are restricted cash meant to fund the specific project the issue was sold for, plus the costs of issuing and marketing the bonds. This ensures the debt is used for a capital purpose and that the issue covers its own related expenses, as outlined in the bond resolution. Therefore, the proceeds must be used for the loan purpose plus the costs of issuing and marketing. Using them for other projects, private ventures, or to cover operating deficits would violate the authorized use and the nature of debt financing.

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