Muni bonds Tax- Terminology Flashcards
Earnings coverage or debt service coverage:
Reflects the number of times by which the revenues for a period exceed the debt service payable in that period
Net revenue/ debt service
Accumulation account
An acct established by the sponsor of a UIT to hold bonds which will be put into the portfolio of the UIT when it is formally created. Account orders must be designated as such at time of order
The lower the debt service coverage
The lower the price of the bond and the higher the yield
CUSIP
Standard number system 1983
Dated Date
Date from which interest accrues on bond issue.
When do you begin to earn interest on a new issue
Debt limit
Legal max debt incurring power of the issuer (statutory limits on GO bonds only)
Debt service
The service of payments including principal and interest calculated to extinguish a debt over a specified time
CONSIST OF PRINCIPAL AND INTEREST CHARGES
Level debt service
Combined annual payments of principal and interest are approximately equal. ONLY OCCURS WITH SERIEL BOND ISSUES
Minicipal dealer joint account
Is two or more firms who buy and resell a block of bonds in 2n mkt
Note that a dealer cannot provide quotes which could indicate more than one market for the bonds quoted
A dealer in a joint account would not bid on bonds out for bid in a notice of sale
What is the project financed that generates funds which retire the revenue bonds issue
Self liquidating revenue bonds
Spread is
The difference bt the syndicate cost, average offering price, and the proceeds paid to the issuer. It includes expenses, management fee, the take down discount and any residual profits
Yield is YTM
Nominal yield, current yield and YTM are all equal when a bond is reading at par( see saw)
If interest rates decline
Bonds trading at a discount would have the greatest increase in price. Those trading at a premium would see less appreciation
