Municipal Securities Flashcards

1
Q

GO Bonds (General Obligation)

A

Backed by the full faith and credit of the issuing municipality

Need Voter Approval

Used To build non-revenue producing facilities

State Level:
Funded by State Income Tax and Sales Tax

Local Level:
Funded by property tax (also known as ad valorem or value tax)

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2
Q

Ad Valorem

A

Another word for Property Tax

Is measured in "mills"

1 mill = .001

Mill rate * assessed value = Tax
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3
Q

Overlapping Debt

A

A Municipal Entity is responsible for paying off all or a portion of the debt that another municipal entity issued

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4
Q

How Are Municipal Bonds Taxed

A

Interest earned by investors is free from federal tax

And

If resident is in the same state as issuing municipality then its interest is free from state tax as well

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5
Q

Revenue Bonds

A
  • Backed by a specific source of revenue
  • No voter approval needed
  • Used to build revenue-producing Facilities/Infrastructure
  • The bond has to be paid off during the useful life of the facility
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6
Q

Self Supporting Debt

A

Another word for Revenue Bond

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7
Q

Double Barreled Bonds

A

A revenue bond that is backed by 2 sources

1. The facility/revenue source
    2. The full faith and credit of the municipality will cover any shortfall
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8
Q

IDR/IDB

Industrial Development Revenue Bond)/(Industrial Development Bond

A

A Revenue Bond Backed by a municipality for a corporation.

The credit rating of these bonds is the credit rating of the corporation.

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9
Q

Special Tax Bonds

A

Bond is paid off using only money raised by levying a special tax

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10
Q

Special Assessment Bonds

A

Bond is paid off with money raised through an assessment

Telling those who will benefit from something that they have to pay for it.

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11
Q

Moral Obligation Bond

A

Municipality can pay off bond if issuer (the facility) defaults

Helps save the credit rating of municipality

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12
Q

PHA / NHA

Public Housing Authority)/ (New Housing Authority

A

Bond is backed by full faith and credit of US Government (if muni cant pay, then they do)

Safest municipal bond on the planet

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13
Q

Tax Anticipation Note (TAN)

A

A municipalities short term debt instrument

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