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Series 7, Kaplan 3rd Edition > Unit 5, Municipal securities > Flashcards

Unit 5, Municipal securities Flashcards

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Series 7 Top-off Exam flashcards
1
Q

FMV

A

fair market value

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2
Q

Bona fide

A

Firm, genuine, real

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3
Q

Bond counsel

A

An attorney specializing in tax-exempt bond offerings

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4
Q

Ex-legal

A

A bond that meets good delivery requirements without an attached legal opinion

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5
Q

OS

A

Official statement

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6
Q

The Bond Buyer

A

A publication that includes the official notice of sale to solicit bids for new bonds
40 Bond index, 20 Bond index, 11 Bond index, Revdex 25

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7
Q

Ad valorem taxes

A

Property taxes, based on value

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8
Q

Coterminous debt

A

Two or more taxing agencies that share the same geographic boundaries.
Overlapping from same taxpayer base
Occurs only in property taxing situations (city and county, never state)

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9
Q

IDR, IDB

A

Industrial development revenue bonds
Facilities or equipment is leased to a corporation
Interest is typically taxable at all levels

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10
Q

NHA

A

New housing authority bond
Low income housing
Section 8 bonds
Not double-barrelled
Backed by federal government

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11
Q

PHA

A

Public housing authority bond
Backed by rental income
Section 8 bonds
Not double-barrelled
Backed by federal government

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12
Q

Excise tax

A

A tax imposed on a specific good or activity. Commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting.

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13
Q

BABs

A

Build America Bonds
Municipal bonds NOT tax-exempt
Tax Credit BABs, bondholder credits 35% of interest paid, can carry forward
Direct Payment BABs, US Treasury credits the issuer with 35% of interest paid
p124

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14
Q

VRDOs

A

Variable rate demand obligations
p108
Maturity of 20 to 30 years
Reset interest rate daily, weekly, monthly, semi-annually, or flexible
Investor can demand that issuer repurchase the bonds at par value
Sometimes considered money market instruments

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15
Q

ARS

A

Auction rate securities
p108
There has not been a new issue ARS since 2007
Amount of outstanding issues is in the billions of dollars
Long-term maturities, 20-30 years
Dutch auctions, reset every 7, 14, 28 or 35 days

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16
Q

Net revenue pledge

A

Operating and maintenance expenses are deducted from gross revenues to determine net revenues
p113

17
Q

Gross revenue pledge

A

The debt service is paid first
Operating and maintenance expenses are paid second
p113

18
Q

Two types of refunding

A

1) advance, uses SLGS, state and local government securities series
2) current, within 90 days

19
Q

Dated date

A

The first date that interest begins to accrue for a new-issue bond.

20
Q

Long coupon

A

If the bond’s dated date is April 1 and the interest payment dates are June 1 and December 1, the first interest payment will be on December 1 and will be for 8 months of interest. This first payment is called a long coupon.

21
Q

Trading today

A

No accrued interest is included in the transaction

22
Q

OID

A

Original issue discount bond
p122

23
Q

AMT bonds

A

Alternative minimum tax
p123-124

24
Q

QTP

A

Qualified tuition program
Section 529 plan

25
Q

TCJA

A

Tax Cuts and Jobs Act of 2017

26
Q

MFP

A

Municipal finance professional
p134
An associated person of a broker-dealer who is primarily engaged in municipal securities activities other than retail sales to individuals
Anyone who solicits municipal security business for the broker dealer
Anyone who is in the supervisory chain above another person with the mfp designation

27
Q

Dollar bond

A

Quoted as a price (percentage of par) instead of basis or yield
They are term bonds
Sinking fund provision

28
Q

Municipal Bond quotes

A

Bona fide or firm quotes
Workable indication
Nominal (subject) quote
Holding a quote: out-firm with recall quote
BW/OW, bid wanted, offer wanted

p95

29
Q

7 mills
Example of property tax rate

A

.007
200,000 x .007 = $1,400

30
Q

MSRB Rule G-30

A

Broker-dealers cannot charge a commission and a markup or markdown on the same transaction. (Remember, municipal securities are exempt from the FINRA 5% policy.)

31
Q

Coverage ratio

A

Specific to revenue bonds
A measure of the safety of a bond issue.
How many times earnings will cover the debt service

32
Q

Double-barreled bonds

A

Revenue bonds backed by taxing authority

Series 7, Kaplan 3rd Edition (15 decks)

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