Municipal Underwriters

Question 1

How much is the good faith check typically for?

Answer 1

2% of issue amount

Question 2

True Interest Cost vs Net Interest Cost

Answer 2

net interest cost: low interest rate

True interest cost: takes into account present value of payments to determine total cost of interest

Question 3

Formula for average life of a bond

Answer 3

total bond years/total number of bonds

Question 4

In an Eastern Account how is liability determined for unsold issues?

Answer 4

members are liable for whatever percentage of the issue they agreed to sell

Question 5

Formula for total interest paid by municipality

Answer 5

Bond years * interest rate

Question 6

Formula for net interest cost

Answer 6

Total Interest (-Premium + discount) / bond years

Question 7

cover

Answer 7

difference between interest cost of bids

Question 8

Order priority for municipal bonds

Answer 8

Pre-sale net
Group net
Designated net
Member takedown

Question 9

Placement ratio

Answer 9

dollar amount of bonds sold/

dollar amount of bonds issued

Question 10

Official Notice of Sale

Answer 10

published by municipal issuer to give details of bond issue

Question 11

What two components make up the total takedown for a syndicate member?

Answer 11

Selling concession + additional takedown

Question 12

What is the disclosure document for municipal issues?

Answer 12

Official Statement

Question 13

For negotiated municipal underwritings does the spread and offering price have to be disclosed?

Answer 13

Yes

Question 14

20 Bond Index

Answer 14

20 GO bonds with 20 years to maturity, rated A or better

Question 15

11 Bond Index

Answer 15

11 GO bonds from 20 bond index, rated AA or better

Question 16

Revdex 25

Answer 16

25 Revenue bonds with 30 years to maturity rated A or better