Muni Bonds

Question 0

GO bonds
State gov
Local gov

Answer 0

Sales and income tax

Real estate tax

Question 1

GO bonds

Answer 1

Backed by taxes, full faith and credit bonds. Voter approval subject to statutory debt limit.

Question 2

Ad valorem tax is:

Answer 2

Assessed valuations on property tax

Question 3

Limited tax bonds

Answer 3

Are general obligation bonds where the municipality puts a statutory limit on the tax rate that may be levied - require voter approval

Question 4

Overlapping debt is

Answer 4

Is debt which more than one municipal entity is responsible. Only occurs at local govt level: library distract, school and park district

NEVER AT STATE LEVEL

Question 5

Revenue bonds

Answer 5

User charges, lease payments, license fees special or excise taxes cigs or liquor.

Question 6

Feasibility study

Answer 6

Prior issuance of revenue bond. Will do study to determine estimated costs and revenues of the project. Construction expenses, service charges and estimated number of users

Question 7

For feasible study an indenture agreement __________when analyst does a study

Answer 7

Not a factor

Question 8

Double barreled bonds

Answer 8

Revenue bonds backed by the full faith and credit of a municipality. Secured by 2 or more sources of income. Safely is greater than just one revenue bond

Question 9

Trust indenture

Answer 9

Rights and duties of the municipality and trustee, trustee BONDHOLDERS, includes bonds reserve fund needs and rate schedules. Prepared by bond counsel

Question 10

Protective covenants

Answer 10

Revenue bonds issued with agreements or covenants to do certain things during the life of the bond

Question 11

Maintainence covenant

Answer 11

Facility maintained in a good operating condition.

Question 12

Debt service or rate covenant

Answer 12

Charge rates that are sufficient to meet all financial requirements, doesn’t cover sinking funds

Question 13

Insurance covenant

Answer 13

Protect investors from Damage of facility CATSTROPHIC CALL COVENANT

Question 14

Flows of funds provisions

Answer 14

States how revenues are applied.

Question 15

Bond indenture/trust indenture

Answer 15

Describes the rights and duties of the municipality and trustee, trustee represents the BONDHOLDERS

Question 16

A bond indenture is a contract between

Answer 16

Also known as the trust indenture act is signed by the issuer and trustee

Question 17

Diversification of a municipal bond portfolio is least affected by

Answer 17

Denomination refers to the value of the security, for municipal bonds it is $5000

Question 18

The printed statement on a municipal bond that concludes with the bonds are valid and binding obligations of this municipality is furnished by

Answer 18

The legal opinion is obtained from an independent law firm hired by municipality

Question 19

Which of the following is attested to by the legal opinion on a municipal security?

Answer 19

Determine the tax exemption and legality of the issue

Question 20

Which of the following is generally quoted as a bid and asked price?

Answer 20

Revenue term bonds which the bid and ask are their “dollar price”

Question 21

The supply of securities of the issue in the secondary market….credit rating

Answer 21

Credit rating refers to the ability of the issuer to pay principal and interest thus bonds in secondary market would have no effect on credit rating

Question 22

A customer is retiring in 2015 and is interested in income and having her principal available at retirement. Which of the following municipal bonds would probably be best recommendation

Answer 22

PHA Bond maturing in 2015, he needs this because this is maturing in this year and best because PHA are highest quality and backed by USGovt

Question 23

The ratio of direct and overlapping debt to property valuation would be used in the credit analysis of which type of municipal bond?

Answer 23

Overlapping debt only applies to GO bonds at the local level

Question 24

A municipal issuer announces a tender offer on its outstanding bonds, it would mean what?

Answer 24

The issuer is offering to buy the bonds back from the investor, often have to pay a price slightly higher than the current market price

Question 25

What ares sources of revenue for municipal revenue bonds

Answer 25

Special tax, user charges, lease payments

Question 26

What is included in a feasibility study for revenue bond proposed for the purpose of a sewer system ?

Answer 26

Charges for the service of the sewer system, estimates on the number of users related to the facility, cost associated with construction

Question 27

If a municipal bond attorney determines that there is a material factor present that could affect the bond issue, he would issue

Answer 27

Qualified legal opinion

Question 28

Excess revenues from an income generating facility financed with a revenue bond issue would be held in the

Answer 28

The key word is excess revenues, which would go to a general or surplus fund

Question 29

if the tax exempt status of municipal bonds was eliminated, the result would probably be

Answer 29

An increase in the yield of newly issued municipals

Question 30

A bind indenture is a contract between

Answer 30

The issuer and the trustee on behalf of the investors

Question 31

A double barreled municipal bond is

Answer 31

Bonds backed by specific revenues from a project along with he municipalities

Question 32

Bond indenture/trust indenture

Answer 32

Describes the rights and duties of the municipality and trustee, trustee represents the BONDHOLDERS