Certified Government Financial Manager (CGFM) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

A term bond is characterized by a large block of bonds maturing in a single year after issuance. This means that all the bonds in the series will have the same maturity date, which distinguishes term bonds from other types such as serial bonds or revenue bonds. With term bonds, investors can anticipate when they will receive their principal repayment, which occurs at the end of the bond’s term rather than at various intervals throughout the life of the bond.

This structure is beneficial for issuers who may want to align the maturity of the bonds with the timing of a specific project or financing needs. Additionally, since all bonds mature at once, they can simplify the management of debt for the issuer.

In contrast, other options refer to different types of bonds or methods of debt management, such as the method of retiring bonds over time or bonds secured by revenue sources, which do not fit the definition of a term bond. Understanding the specific characteristics of each type of bond is crucial for discerning their implications for investment and financing strategies.