Notes new Flashcards
What are the issue time frames for the following;
T-Bills
T-Notes
T-Bonds
Treasury bills mature in a year or less.
Treasury notes have maturities from two to 10 years, Treasury bonds have maturities of greater than 10 years.
T-Notes
T-Bonds
Pay interest at what interville
Semi Annually
Tom Customer receives a call from his municipal bond salesperson concerning 100M Oklahoma PPD 6% due 7/15/25 which he had previously purchased and still owns. The salesperson suggests that Tom swap the 100M Oklahoma bonds for 100M Nebraska PPD 6% due 7/15/25 for “even dollars.” The salesperson goes on to say that the Nebraska’s normally trade 30 basis points lower in yield than the Oklahoma bonds. If you were asked by Tom for your advice, which of the following choices would you suggest?
The customer should do the swap because the Nebraska bonds can be purchased at an attractive price. If the Nebraska’s go back to trading at a lower yield, they will provide an opportunity for a gain
examples of short term municipl notes
RAN revenue anticipation note
TAN tax anticipation note
BAN bond anticipation note
If net overall debt exceeds net direct debt by a significant amount, this indicates a large amount o
Overlapping debt
Net overall debt is equal to net direct debt plus overlapping debt. Large differences between net overall debt and net direct debt is due to a large amount of overlapping debt
The real interest rate is best defined as the:
Interest earned that exceeds the inflation rate
A municipal dealer has offered bonds to a customer at a specific price. The offer requires the customer to purchase the bonds now or the offer will be withdrawn. This is known as what type of order?
Fill-or-kill
PURCHASING a municipal at a discount and holding to maturity causes what type of income.
An investor purchasing a secondary market discount municipal bond will have ordinary income if the bond is held to maturity.
What effect does the coupon rate have on duration.
Duration measures the time it takes for invested funds to be returned and is measured in terms of years. The longer the period, the greater the bond’s risk due to changing interest rates. Two main factors that help to determine a bond’s duration are (1) the time to maturity, and (2) the coupon rate. A bond with a short maturity will repay the investor sooner than a bond with a long maturity. Also, a bond with a high coupon will repay an investor sooner than a bond with a low coupon
What would an analyst be most concerned with when evaluating a revenue bond
An analyst would be most concerned with rate covenants. This is an agreement made by the municipal issuer to maintain rates high enough to cover maintenance and operating charges and to meet annual debt service requirements.
The first step in preparing a bid for a competitive sale is
Propose the reoffering yields
The underwriter is required to provide information to a securities depository concerning a new issue:
No later than two business hours after the Time of Formal Award
The manager of a new municipal offering pays for the bonds when the:
Bonds are available for delivery
To determine the dollar price of a bond what is needed
To determine the dollar price of a bond, you require the coupon rate, maturity, settlement date, and the yield to maturity. The dated date is needed to determine the amount of accrued interest, but only until the first interest payment
As a dollar amount, a mill is equal to
By definition, a mill is 1/10th of one cent. The decimal equivalent of a mill is .001. This equates to 10 cents per $100 of assessed evaluation (
INterest due to seller on cash settlement
Remember that cash settlement is same day so the seller loses the interest on the day they sold if cash settlement is used.
The Bond Buyer Municipal Bond Index is:
Published
Updated
Published Daily
Updated twice a month.
A reduction in the rate of inflation is known as:
Deflation
The purchaser of a municipal security may initiate a close-out procedure no earlier than:
The first business day following the settlement date
If municipal securities representative include a hyperlink on its website to the content of an independent third-party when is it considered advertisement.
The content is considered advertising by the broker-dealer if the firm was either involved in the preparation of the content (entanglement) or implicitly or explicitly approved or endorsed the content (adoption).
In periods of easy money, when interest rates are declining, yield curves would tend to:
Slope upward from the shorter to the longer maturities
Under the MSRB’s Best Execution Rule (G-18), the term market would not include:
The use of another broker acting as an agent
A reverse repurchase agreement is sometimes called a(n):
Matched sale
concerning the availability of MSRB rules
Customers may examine the rules upon request
Firms may provide customers with Internet access to the rules in lieu of a hard copy
Do not have to be provided annually
The carrying party must complete the transfer of a customer account:
Within three business days of validation of the transfer instructions
1 business day to validate so technically 4 days.
Leading economic indicators
building permits
consumer expectations
stock prices
what type of economic indicator is the prime rate
lagging
