Municipal Bonds
Which type of revenue bond indenture is MORE favorable to bondholders?
A closed-end indenture is more favorable to bondholders because any new bonds issued must be subordinate (junior) to the original bonds. In an open-end indenture, new bonds have equal claim to revenues (pari passu), dilu
Complete Analysis & Legal Rationale
A closed-end indenture is more favorable to bondholders because any new bonds issued must be subordinate (junior) to the original bonds. In an open-end indenture, new bonds have equal claim to revenues (pari passu), diluting existing bondholders' security.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.