The final principal payment in a municipal bond schedule should not exceed how many times the first payment?

The correct understanding of the schedule for principal payments on a municipal bond is that the final principal payment should not exceed two times the amount of the first payment. This guideline helps ensure consistency and manageability in the repayment structure of municipal bonds.

By limiting the final principal payment to two times the first payment, municipalities can maintain a balanced approach to budgeting and reduce the risk of financial strain or market fluctuations affecting their ability to make payments. This practice also supports stabilizing cash flow over the life of the bond, which is critical for managing public funds effectively.

Municipal bonds are often issued with the intent of providing long-term financing for public projects with predictable revenue streams. Thus, adhering to this payment structure can contribute to a responsible fiscal framework, ensuring that municipalities remain accountable to their residents and investors alike.