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Series 7 > Muni's > Flashcards

Muni's Flashcards

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Series 7 Top-off Exam flashcards
1
Q

Fed Tax Exempt + State for Resident

A

Muni Bonds

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2
Q

T strip

A

Government created & backed zero coupon

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3
Q

T Receipt

A

BD Created and backed zero coupon

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4
Q

T Bills

A

Zero Coupon(flat) 4,13,26 52 week issuance

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5
Q

T Notes

A

2-10 years, pays interest semi-annually

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6
Q

T Bonds

A

Beyond 10 years, pays interest semiannually

Quoted in % of par

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7
Q

General Obligation Bond

A

Safe/Requires Voter Approval/Debt Limits/Supported by Tax Money

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8
Q

Revenue Bonds

A

Riskier/User fees (tolls/concessions)/no voter approval/trust indenture/protective covenants/self-supporting

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9
Q

Trust Indenture

A

Revenue Bonds
Make bond more marketable (because more risk invloved)
Protective Covenants (promises from issuer)

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10
Q

Covenants

A

Revenue Bonds
1. Rate - user fees - maintenance/insurance/principal and interest
2. Add’l Bonds - Yes: Open-Ended - additional bonds test
Close-Ended - junior in claim 2nd in payment to 1st bond

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11
Q

Call Provisions

A

Revenue Bonds - Whole/Paritial (serials, selected at random)/ Catastrophes - natural disaster

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12
Q

Flow of Funds

A

Gross Revenue - Debt/Operating Expense

Net - Operating Expenses/Debt

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13
Q

IDR’s

A

Private Purpose Industrial Development Revenue Bond

Interest may be taxable (AMT)

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14
Q

Special Tax

A

Revenue Bond

Alcohol/Tabaco/Excise

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15
Q

Moral Obligation

A

Revenue Bond - No voter approval
From state legislature, if revenue doesn’t pay then state will
State legislatures moral obligation
Backed by user fees and state legislature

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16
Q

Double Barrel Bond

A

Backed by the city and county

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17
Q

ARS

A

Money Market Alternative
Liquid/safe
RISK - failed auction, no bid, no demand

18
Q

Municipal Note

A

Short term cash flow bridge

TAN/BAN/RAN

19
Q

GO Analysis

A 
Gross Revenue Pledge
Voter attitude matters
Population Growth
Debt Limits
Tax Delinquency
20
Q

GO’s Debt Calc

A

Total Debt - Overlapping Debt = Direct Debt (Coterminous Debt)

21
Q

Pre-Refunding (Advanced Refunding)

A

Ability for issuer to removed from debt statement of municipality
Increase ratings
“Defeased” - no longer an obligation on debt statement

22
Q

Western Liability

A

Divided, % liable for, no additional syndicate orders

23
Q

Eastern Liability

A

Undivided, additional % after unsold, additional commitment

24
Q

Bond Counsel

A

Attorneys legal opinion to

  1. legally authorize the issue
  2. IRS sign off from tax
  3. Exempt from ‘33 Act
    * Acts as Qualified
25
Q

Unqualified

A

Approval without a Bond Counsel
Find nothing wrong - no doubt
*want this type

26
Q

Official Statement

A 
Not required
Helps market bonds
Prepared by UW with help from issuer
Approved by muni principal
Provides rating 
Must retain for 3 years
27
Q

Straight Line Amortization (taxation)

A

Held to maturity - no gain/loss

Sold priory to maturity - adjust over life of bond

28
Q

What interest is federally, state, and local tax exempt?

A

US Residents in US Territories

Puerto Rico/Guam/VI

29
Q

Taxation in the 2ndary Market

A

Cost vs Sale (no adjustment)

30
Q

Original Issue Discount (OID)

A

Bought at discount, held to maturity ok

If Sold prior - use straight line accretion

31
Q

What is the most important suitability on a muni?

A

Those in the HIGHEST Tax Bracket

32
Q

What is the Equivalent Tax (Corp) Yield?

A

Muni Yield /100%-TB = Corp Yield

33
Q

What is the Tax Free Yield?

A

Corporate Yield(100-TB) = Muni Yield

34
Q

What is on the Bond Confirmation Statement?

A 
Interest payment and dates
Maturity Date
Callable dates (option)
Dated Date - date when interest begins to accrue
CUSIP #
Capacity - Agency (Broker) / Principal (Dealer)
Yield to Worst
Control Relationships
35
Q

MSRB

A

An overseer who makes rules, but does not enforce them

36
Q

What is a control relationship?

A

Someone who represents (has authority over) issuer &B/D

37
Q

Rule G37

A

Prohibits more than $250 in political contributions

38
Q

What is the REVDEX

A

25 Revenue Bonds held for 30 years

In the Bond Buyer

39
Q

What is the Bond Buyer

A

Daily list of new issue Muni’s/GO’s

30 Day Visible Supply (what will be issued in next 30 days)

40
Q

What is the placement ratio?

A

$ sold/$ offered

Series 7 (8 decks)

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