A limited tax bond is limited to what?

A limited tax bond is characterized by its restriction tied to a specified maximum tax rate and tax course, which is reflected in answer choice C. This type of bond is typically issued by municipalities and is backed by revenue generated from a specific tax or taxes. The key aspect of a limited tax bond is that the issuer can only levy taxes up to a certain rate to generate revenue for bondholders.

This means that if the revenue collected from the specified tax exceeds the needs for bond repayments, it does not provide further security beyond that capped tax limit. Therefore, the bondholders face some risk, as bond repayments rely solely on the revenue generated from these limited tax sources.

In contrast, the other options do not adequately define the restrictions on a limited tax bond. For example, while a specific maturity date might indicate the bond's repayment timeline, it does not capture the essence of the limited tax nature. Similarly, a certain interest rate and geographical location of income are elements of bonds but do not specifically relate to how limited tax bonds are structured or secured.