What is a type of debt security issued by a government entity to finance a construction project?

The correct choice is a type of debt security issued by a government entity to finance a construction project. In this context, a bond serves as a formal promise to repay borrowed money at a specified interest rate within a defined timeframe. Governments issue bonds, including general obligation bonds and revenue bonds, as a way to fund various public projects, including infrastructure development.

By issuing bonds, governments can raise necessary capital upfront for construction projects while spreading the cost over time through future tax revenues or project-specific revenues. This financing method is essential for large-scale projects that require significant funding upfront, enabling projects to be completed without immediately taxing the public or drawing on other funding sources.

Understanding the various types of bonds, such as general obligation bonds, which are backed by the full faith and credit of the issuing government, and revenue bonds, which are supported by specific revenue sources related to the project, can help clarify the distinction among them. However, the broader category of bonds encompasses both of these types and provides a comprehensive view of how government entities finance construction projects through debt securities.