Muni's

Question 1

Fed Tax Exempt + State for Resident

Answer 1

Muni Bonds

Question 2

T strip

Answer 2

Government created & backed zero coupon

Question 3

T Receipt

Answer 3

BD Created and backed zero coupon

Question 4

T Bills

Answer 4

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

Question 5

T Notes

Answer 5

2-10 years, pays interest semi-annually

Question 6

T Bonds

Answer 6

Beyond 10 years, pays interest semiannually

Quoted in % of par

Question 7

General Obligation Bond

Answer 7

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

Question 8

Revenue Bonds

Answer 8

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

Question 9

Trust Indenture

Answer 9

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

Question 10

Covenants

Answer 10

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

Question 11

Call Provisions

Answer 11

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

Question 12

Flow of Funds

Answer 12

Gross Revenue - Debt/Operating Expense

Net - Operating Expenses/Debt

Question 13

IDR’s

Answer 13

Private Purpose Industrial Development Revenue Bond

Interest may be taxable (AMT)

Question 14

Special Tax

Answer 14

Revenue Bond

Alcohol/Tabaco/Excise

Question 15

Moral Obligation

Answer 15

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

Question 16

Double Barrel Bond

Answer 16

Backed by the city and county

Question 17

ARS

Answer 17

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

Question 18

Municipal Note

Answer 18

Short term cash flow bridge

TAN/BAN/RAN

Question 19

GO Analysis

Answer 19

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

Question 20

GO’s Debt Calc

Answer 20

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

Question 21

Pre-Refunding (Advanced Refunding)

Answer 21

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

Question 22

Western Liability

Answer 22

Divided, % liable for, no additional syndicate orders

Question 23

Eastern Liability

Answer 23

Undivided, additional % after unsold, additional commitment

Question 24

Bond Counsel

Answer 24

Attorneys legal opinion to

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

Question 25

Unqualified

Answer 25

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

Question 26

Official Statement

Answer 26

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

Question 27

Straight Line Amortization (taxation)

Answer 27

Held to maturity - no gain/loss | Sold priory to maturity - adjust over life of bond

Question 28

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

Answer 28

US Residents in US Territories | Puerto Rico/Guam/VI

Question 29

Taxation in the 2ndary Market

Answer 29

Cost vs Sale (no adjustment)

Question 30

Original Issue Discount (OID)

Answer 30

Bought at discount, held to maturity ok | If Sold prior - use straight line accretion

Question 31

What is the most important suitability on a muni?

Answer 31

Those in the HIGHEST Tax Bracket

Question 32

What is the Equivalent Tax (Corp) Yield?

Answer 32

Muni Yield /100%-TB = Corp Yield

Question 33

What is the Tax Free Yield?

Answer 33

Corporate Yield(100-TB) = Muni Yield

Question 34

What is on the Bond Confirmation Statement?

Answer 34

``` 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 ```

Question 35

MSRB

Answer 35

An overseer who makes rules, but does not enforce them

Question 36

What is a control relationship?

Answer 36

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

Question 37

Rule G37

Answer 37

Prohibits more than $250 in political contributions

Question 38

What is the REVDEX

Answer 38

25 Revenue Bonds held for 30 years | In the Bond Buyer

Question 39

What is the Bond Buyer

Answer 39

Daily list of new issue Muni's/GO's | 30 Day Visible Supply (what will be issued in next 30 days)

Question 40

What is the placement ratio?

Answer 40

$ sold/$ offered