In a Bond Covenant, a City Agreed to Create and Maintain

In a bond covenant, a city agreed to create and maintain a $2 million reserve.These funds can be used

A) Only to make the final year's interest and principal payments on the bonds.
B) Only to make the interest and principal payments on the bonds in a year in which the city is unable to make the required debt service payments from other resources.
C) To make either the final year's interest and principal payments on the bonds or in the event that the city is unable to make the interest and principal payments on the bonds.
D) By the city as it chooses since it legally belongs to the city.

Correct Answer:

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