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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Moral Obligation Bond

Definition:

One issuer of a bond decides to pay bondholders if the original issuer of the bond defaults. They don't legally have to do it; they do so because it's "right thing to do."

Example

San Diego issues a bond, and the state of California decides to pay the bondholders if San Diego defaults.