Series 7 Muni's Review
Which of the following statements regarding a municipal variable-rate demand obligation are true? 1. Interest payments are tied to the movements of another specified interest rate. 2. Interest payments are tied to the movements of an underlying stock or index. 3. The coupon rate stays the same for the life of the demand obligation, and the price fluctuates. 4. The coupon rate of the bond changes, and the price remains stable. A) I and IV B) II and III C) II and IV D) I and III
A) I and IV
Which of the following statements regarding a bond trading flat is not true? A) It may be traded with accrued interest. B) It may be an income bond. C) It may be a bond in default. D) It may have interest in arrears.
A) It may be traded with accrued interest.
If a customer buys a Mount Vernon Port Authority municipal bond in the secondary market at 109 and holds the bond to maturity, what are the tax consequences? A) No capital gain or loss B) Capital loss of $9 C) Capital loss of $90 D) Capital gain of $9
A) No capital gain or loss The investor's cost basis of bonds purchased at a premium is adjusted by amortization of the premium. In this case, there is a $90 premium that will have been completely amortized at maturity. At maturity, the adjusted cost basis equals the face value, and no loss or gain is realized.
Which of the following securities would have a Moody's MIG rating? A) TANs B) GOs C) BAs D) T-bills
A) TANs TANs are tax anticipation notes. These are short-term municipal securities and that is what Moody's MIG ratings represent. MIG stands for Municipal Investment Grade. GOs are rated with the normal letter ratings and BAs (bankers' acceptances) and T-bills are not municipal securities.
Which of the following would not be found in a municipal revenue bond resolution? A) Underwriting agreement B) Reporting requirements regarding revenues collected C) Conditions of the maintenance covenant D) Terms of the rate covenant
A) Underwriting agreement
The Municipal Securities Rulemaking Board (MSRB) is authorized under the Securities Exchange Act of 1934 to make rules about all of the following except A) information provided by municipal issuers. B) the dissemination of price and yield quotes by municipal dealers. C) dealers obtaining fair and reasonable prices for customers. D) municipal dealer recordkeeping.
A) information provided by municipal issuers. The MSRB governs the practices of underwriting and trading municipal bonds. It does not govern municipal issuers.
Alternative minimum tax (AMT) A) is assessed against high annual income earners and disallows some deductions and exemptions used to calculate adjusted gross income. B) is assessed against high annual income earners and gives them special deductions that lower income earners do not get. C) is assessed against all self-employed individuals. D) is assessed against low annual income earners and allows special deductions for them to be taken.
A) is assessed against high annual income earners and disallows some deductions and exemptions used to calculate adjusted gross income. The AMT is assessed against high annual income earners. When calculating adjusted gross income, some deductions and exemptions are disallowed, resulting in a higher taxable adjusted gross income.
Revenue bond rate covenants require the user fees to be high enough to cover all of the following obligations of the issuing authority except A) the optional call provisions. B) the operations and maintenance. C) the debt service reserve fund. D) the debt service.
A) the optional call provisions.
A broker-dealer that is a financial advisor to a municipal issuer 1. cannot act as an underwriter of the issuer's bonds in a negotiated underwriting and receive compensation for both services. 2. cannot act as an underwriter of the issuer's bonds in a competitive bid underwriting and receive compensation for both services. 3. may always act as an underwriter of the issuer's bonds in a negotiated underwriting and receive compensation for both services. 4. may always act as an underwriter of the issuer's bonds in a competitive bid underwriting and receive compensation for both service. A. I and II B. II and III C. II and IV D. I and III
A. I and II
If a customer purchases five newly issued municipal bonds for 101 and holds the bonds to maturity, the tax consequence is A) $50 capital loss. B) $0 gain or loss. C) not possible to calculate with the information provided. D) $50 capital gain.
B) $0 gain or loss. If a new issue municipal bond is bought at a premium, the premium must be amortized over the life of the bond. At maturity, no capital gain or loss would occur because the premium would have been fully amortized.
Which of the following is considered a double-barreled bond? A) Build America Bonds B) Bridge authority revenue bonds guaranteed by the full faith and credit of a city C) Dome stadium bonds with provisions for emergency ceiling support D) Moral obligation bonds
B) Bridge authority revenue bonds guaranteed by the full faith and credit of a city
Which of the following would not be examples of overlapping debt? 1. Debt to build a state office building within city limits 2. Debt to maintain a county park district serving a municipality 3. Debt backed by two states cooperating in the construction of a bridge 4. Debt for a high school district within city limits A) I and II B) I and III C) II and IV D) II and III
B) I and III State debt cannot overlap with any other municipal entity.
Which of the following would be considered in analyzing the credit worthiness of a revenue bond issuer? 1. Per capita debt 2. Debt service coverage 3. Management 4. Debt to assessed valuation A) I and IV B) II and III C) I and II D) III and IV
B) II and III
The alternative minimum tax (AMT) is designed to present an alternative tax computation that disallows deductions for certain tax preference items and includes certain nontaxable income. Which of the following is not a tax preference item? A) Local income and property taxes B) Interest received on corporate bonds C) Certain costs associated with an oil and gas drilling program D) Tax-exempt interest received on private purpose bonds
B) Interest received on corporate bonds
A new municipal bond issue had a dated date of January 1, 2018. The first coupon was due on August 1, 2018. The customer bought for settlement on September 1, 2018. How many months of accrued interest must he pay at settlement? A) Seven months B) One month C) Eight months D) Six months
B) One month
An investor has losses on the sale of municipal bonds. Which of the following, for tax purposes, is true? A) No losses on municipal bonds can be applied against gains on sales of any securities. B) The losses can be applied against the gains on the sale of any other security. C) The losses can be applied only against gains on the sale of other debt instruments (bonds). D) The losses can be applied only against gains on the sale of other municipal bonds.
B) The losses can be applied against the gains on the sale of any other security.
A customer buys five municipal bonds maturing in 20 years for 104. If he sells the bonds after 10 years at 103, the customer has A) a $100 capital gain. B) a $50 capital gain. C) a $50 capital loss. D) a $100 capital loss.
B) a $50 capital gain.
The City of Columbus issued a 20-year general obligation bond at a price of 50. An original purchaser sold the bond at 75 after holding it for 7 years. For tax purposes, that sale generated A) a $25 capital gain. B) a $75 capital gain. C) no gain or loss. D) a $250 capital gain.
B) a $75 capital gain.
If an indenture has a closed-end provision, this means A) a sinking or surplus fund must be established. B) additional issues will have junior liens. C) the bonds must be called before maturity. D) additional issues have no lien on the revenue stream.
B) additional issues will have junior liens.
Municipal bonds—known as dollar bonds—are generally quoted A) net yield. B) as a percentage of par. C) yield to maturity. D) yield to call.
B) as a percentage of par.
Municipal securities broker's brokers A) bid on negotiated underwritings. B) execute trades for other municipal securities broker-dealers. C) share the names of their clients with the executing dealers. D) participate in selling groups on new municipal issues.
B) execute trades for other municipal securities broker-dealers.
Each of the following choices are potential sources of funds associated with the backing of a revenue bond issue except A) concessions. B) fines. C) lease payments. D) ticket revenues.
B) fines.
Variable-rate municipal bonds are subject to all of the following risks except A) default. B) interest rate. C) market. D) liquidity.
B) interest rate.
A statutory debt limitation restricts a municipality's authority regarding A) raising tax rates. B) issuing general obligation (GO) bonds. C) selling revenue bonds. D) insuring bond issues.
B) issuing general obligation (GO) bonds.
An insured municipal bond is purchased by your client in the secondary market. After the sale, Municipal Securities Rulemaking Board rules would require you to A) include a copy of the insurance policy with delivery of the certificates. B) make delivery of the certificates accompanied by evidence of insurance, either on the face of the certificates or in a separate document. C) send a copy of the official statement. D) indicate that the bonds are insured on the confirmation because this is the only requirement.
B) make delivery of the certificates accompanied by evidence of insurance, either on the face of the certificates or in a separate document.
If a municipal bond rated BBB is prerefunded, all of the following statements are true except A) the rating of the issue will increase. B) the marketability of the issue will decrease. C) the issue is now backed by U.S. government securities. D) funds required to meet debt servicing have been set aside in escrow.
B) the marketability of the issue will decrease.
All of the following statements regarding municipal revenue bonds are true except A) the interest and principal are paid from revenue received from the facility. B) the maturity of the revenue bond will usually exceed the useful life of the facility being built. C) no debt limitation is set by the issuing municipality. D) revenue bonds can be issued by inter- or intrastate authorities.
B) the maturity of the revenue bond will usually exceed the useful life of the facility being built.
Whether funds should be allocated to support the debt service on a moral obligation bond in default is usually determined by A) the state governor. B) the state legislature. C) the trustee. D) the courts.
B) the state legislature.
Badentown is planning to raise money in three months to build a new city hall. The mayor wishes to start ground preparation immediately. How could money be raised to fund the work? A) Special assessment bond B) Limited tax bond C) Bond anticipation note (BAN) D) Construction loan note
C) Bond anticipation note (BAN)
Which of the following statements are true? A. Build America Bonds (BABs) are tax exempt at all levels. B. Direct-payment BABs provide the municipal issuer with payments from the U.S. Treasury. C. BABs are issued by the U.S. Treasury. D. Tax credit or issuer BABs provide the municipal bondholder with a federal income tax credit. A. I and III B) I and IV C) II and IV D) II and III
C) II and IV
Which of the following is considered a source of debt service for a city-issued general obligation (GO) bond? A) Revenue generated by a hospital B) Sales taxes C) Real estate taxes D) Tolls on roads
C) Real estate taxes
Which of the following are funded by general tax receipts? A) Bond anticipation notes (BANs) B) Hospital revenue bonds C) Tax anticipation notes (TANs) D) Revenue anticipation notes (RANs)
C) Tax anticipation notes (TANs)
An investor has losses on the sale of municipal bonds. Which of the following, for tax purposes, is true? A) The losses can be applied only against gains on the sale of other municipal bonds. B) No losses on municipal bonds can be applied against gains on sales of any securities. C) The losses can be applied against the gains on the sale of any other security. D) The losses can be applied only against gains on the sale of other debt instruments (bonds).
C) The losses can be applied against the gains on the sale of any other security.
When does pension payment liability affect the credit rating of a municipality? A) When funds are invested presently to meet future pension needs B) When the return on funds invested to meet future needs exceeds anticipated payments C) When funds needed to make payments exceed funds available D) Never
C) When funds needed to make payments exceed funds available
An investor who wants a long-term tax-free bond with the highest possible safety should invest in A) a AAA-rated general obligation bond. B) a Aaa-rated revenue bond. C) a New Housing Authority bond. D) a double-barreled bond.
C) a New Housing Authority bond.
With bonds subject to a gross revenue pledge, the first priority will be to pay A) the first lien on the property. B) operation and maintenance. C) bond interest and principal. D) the sinking or surplus fund.
C) bond interest and principal.
All of the following statements regarding 529 plans are true except A) a beneficiary of a 529 plan may also be the beneficiary of a Coverdell Education Savings Account. B) earnings accumulate tax free if the money is used for qualified educational purposes. C) contributions are made with pretax dollars at the federal level. D) anyone can make a contribution on behalf of a beneficiary.
C) contributions are made with pretax dollars at the federal level.
Municipal brokers' brokers deal with all of the following except A) municipal dealers. B) bank dealers. C) individuals. D) institutions.
C) individuals.
A variable-rate municipal bond investment's main advantage is that A) it is noncallable. B) its interest is exempt from all taxes. C) its price should remain relatively stable. D) it is likely to increase in value.
C) its price should remain relatively stable.
Debt service is best described as A) net interest on a new issue of a municipal bond. B) total of the direct debt of a municipality and the debt of its political subdivisions. C) the total of interest and principal payable by the issuer plus any amount required to be deposited into a sinking fund. D) services provided by the paying agent for a bond issue.
C) the total of interest and principal payable by the issuer plus any amount required to be deposited into a sinking fund.
A customer bought a bond that yields 6.5% with a 5% coupon. If the bond matures at this point, the customer will receive A) $1,000 plus a call premium. B) $1,050. C) $1,065. D) $1,025.
D) $1,025. Upon redemption of a bond, whatever current interest rates may be, the investor receives par ($1,000) plus the final semiannual interest payment ($25 in this case), for a total of $1,025.
Of the following callable bonds, which confirmation must show yield to call? A) 6% municipal, par, due 2038 B) 6% municipal, basis 6.5%, due 2028 C) 6% municipal, basis 7%, due 2038 D) 6% municipal, basis 5.5%, due 2028
D) 6% municipal, basis 5.5%, due 2028 The only bond priced at a premium is 6% municipal, basis 5.5%, due 2028. On a premium bond, the yield to call will be lower than the yield to maturity.
Which of the following is a double-barreled bond? A) Anticipation note B) General obligation bond to construct a new grade school C) New Housing Authority (NHA) bond D) Hospital bond backed by revenues and taxes
D) Hospital bond backed by revenues and taxes
One of your customers purchased a municipal bond at a basis of 3.35%. Several weeks later, the bond's basis is now 3.21%. Which of the following statements is true? 1. The bond's yield to maturity has fallen by 14 basis points 2. The bond's price has fallen by 14 basis points 3. Market interest rates have likely decreased 4. The bond's rating has likely fallen A. II and III B) I and IV C) II and IV D) I and III
D) I and III
Which of the following are considered sources of debt service for general obligation (GO) bonds? 1. Tolls on roads 2. Real estate taxes 3. Revenue generated by a hospital 4. Liquor license fees A) I and IV B) I and III C) II and III D) II and IV
D) II and IV
Which of the following is least important to a municipal bond analyst? A) Tax collection ratio B) Debt service to annual revenues C) Revenue collection record D) Legality of the issue
D) Legality of the issue
A municipal bond dealer is making a bona fide quote. Which of the following statements regarding such a quote is true? A) The quote may not take into consideration any anticipated market movement. B) The quote need not be one that the dealer is prepared to act upon (buy or sell). C) The quote cannot represent an offer to sell bonds that the dealer does not currently own. D) The quote must have a reasonable relationship to fair market value.
D) The quote must have a reasonable relationship to fair market value.
When does pension payment liability affect the credit rating of a municipality? A) When the return on funds invested to meet future needs exceeds anticipated payments B) Never C) When funds are invested presently to meet future pension needs D) When funds needed to make payments exceed funds available
D) When funds needed to make payments exceed funds available
The term municipal fund security refers to A) an advance refunded municipal bond. B) a municipal bond with a sinking fund. C) a mutual fund whose portfolio is exclusively municipal bonds. D) a Section 529 savings plan.
D) a Section 529 savings plan.
An investor purchases a municipal bond at par to yield 5.5% to maturity. Two years later, if he sells the bonds at a price equivalent to a 5% yield to maturity, the investor incurs A) a capital loss. B) no taxable result at this time. C) tax-free income. D) a capital gain.
D) a capital gain.
All of the following would be considered when evaluating a municipal revenue bond's creditworthiness except A) competing facilities. B) management expense. C) coverage ratio. D) collection ratio.
D) collection ratio.
All of the following are characteristics of 529 plans except A) the assets can be transferred to a family member if not used by the original beneficiary. B) there is no age limit on the beneficiary. C) an official statement (OS) must be provided to any prospective purchaser. D) donor income limits apply.
D) donor income limits apply.
All of the following municipal bonds would be defined as revenue bonds except A) special assessment bonds. B) new housing authority bonds. C) special tax bonds. D) general obligation bonds.
D) general obligation bonds.
Variable-rate municipal bonds are subject to all of the following risks except A) default. B) liquidity. C) market. D) interest rate.
D) interest rate.
Net overall debt of a municipality is A) funded debt plus overlapping debt. B) funded debt minus overlapping debt. C) net direct debt minus overlapping debt. D) net direct debt plus overlapping debt.
D) net direct debt plus overlapping debt.
All of the following may be used to service special tax bond issues except A) excise taxes. B) gasoline taxes. C) business license taxes. D) real estate taxes.
D) real estate taxes.
All of the following characteristics regarding industrial development bonds (IDBs) are true except A) funds from the lease are used to pay the principal and interest on the bonds. B) the bonds are issued by municipalities or other governmental units. C) the funds are used to construct a facility for a private corporation. D) the bonds are normally backed by the full faith and credit of the municipality.
D) the bonds are normally backed by the full faith and credit of the municipality.
The bond resolution includes all covenants between A) the bond counsel and the bondholders. B) the issuer and the bond counsel. C) the issuer and the Municipal Securities Rulemaking Board. D) the issuer and the trustee acting for the bondholders.
D) the issuer and the trustee acting for the bondholders.
In rating a general obligation (GO) bond, all of the following factors would be considered by an analyst except A) the flow of funds. B) the total outstanding debt. C) the public's attitude toward debt. D) the tax collection ratio.
A) the flow of funds.
In analyzing a municipal government obligation bond, an increase in all of the following would be a negative indication except A) municipal operating expenses. B) property values. C) unemployment. D) delinquent taxes.
B) property values.
One of the benefits of adding a sinking fund provision to a municipal bond issue is that the bond will generally A) have a longer maturity. B) receive a higher rating. C) receive more favorable tax treatment. D) carry a higher coupon.
B) receive a higher rating.
A municipal bond is purchased in the secondary market at 102½. The bond has five years to maturity. Two years later, the bond is sold for 102. The tax consequence to the investor is A) a capital loss of $5 per bond. B) no capital gain or loss. C) a capital gain of $5 per bond. D) a capital loss of $20 per bond.
C) a capital gain of $5 per bond. Municipal bonds bought at a premium, either in the new issue or secondary market, must be amortized. The amount of the premium is 2½ points, or $25. As the bond has five years to maturity, the annual amortization amount is $5 per bond. After two years, the bond's basis has been amortized down to 101½. At that point, a sale at 102 generates a capital gain of $5 per bond.
Revenue bonds may be called for all of the following reasons except A) the facility has been destroyed. B) a provision in a sinking fund agreement is calling for a partial call. C) interest rates have fallen. D) the issuer has reached a statutory debt limit.
D) the issuer has reached a statutory debt limit.
Which of the following statements regarding an official statement are true? 1. It is required by the SEC for all new issues. 2. It is required by the Municipal Securities Rule-making Board (MSRB) for all new issues. 3. It must be delivered to purchasers at or before settlement. 4. It is generally used by underwriters to help sell the issue. A. I and IV B. II and III C. I and II D. III and IV
D. III and IV
An issuer may be able to diversify a single municipal bond issue by maturity because A) many municipal bonds are serial issues. B) many municipal securities are very marketable. C) every state issues municipal bonds. D) municipal securities are mostly long term.
A) many municipal bonds are serial issues.
An investor buys a GO bond with a coupon of 3½% that has a basis of 3¾%. If the bond is held until maturity, the investor's actual yield will be A) more than 3½% but less than 3¾%. B) more than 3¾% . C) 3¾%. D) 3½%.
A) more than 3½% but less than 3¾%.
All of the following may be used to service special tax bond issues except A) real estate taxes. B) business license taxes. C) excise taxes. D) gasoline taxes.
A) real estate taxes.
TANs, RANs, GANs, and BANs are issued by municipalities seeking A) short-term financing. B) financing for low-cost housing. C) bond insurance. D) special tax assessments for general obligation bonds.
A) short-term financing.
Several years ago, one of your customers bought an original issue discount (OID) municipal bond at $960. The bond has now matured. For federal income tax purposes, the discount is A) tax free. B) taxed as a long-term capital gain. C) taxed each year as ordinary income. D) taxed at maturity as ordinary income.
A) tax free.
All of the following characteristics regarding industrial development bonds (IDBs) are true except A) the bonds are normally backed by the full faith and credit of the municipality. B) the bonds are issued by municipalities or other governmental units. C) the funds are used to construct a facility for a private corporation. D) funds from the lease are used to pay the principal and interest on the bonds.
A) the bonds are normally backed by the full faith and credit of the municipality.
All of the following statements regarding industrial revenue bonds (IRBs) are true except A) the credit rating of the bonds is dependent on the credit rating of the municipality. B) they can be issued by municipalities to provide local industries with funds for expansion. C) interest is paid from rental payments received from corporations that have leased the property or equipment from the municipality. D) they can be issued by municipalities to build facilities that will be owned by the municipality but leased to a local corporation.
A) the credit rating of the bonds is dependent on the credit rating of the municipality.
The Municipal Securities Rulemaking Board (MSRB) is authorized to adopt rules concerning all of the following except A) the information to be provided by municipal issuers. B) the form and content of price quotations. C) the regulation of municipal securities advertising. D) the sale of new issues to related portfolios.
A) the information to be provided by municipal issuers.
All of the following might affect the credit rating of a municipal revenue issue except A) the tax rates of nearby municipalities. B) the debt service coverage ratio. C) the quality of the facilities management. D) the rate covenants set forth in the indenture.
A) the tax rates of nearby municipalities. The credit rating of a revenue issue would not be affected by tax rates in surrounding municipalities.
Typically, general obligation bonds are not sold short because A) thin markets may make it difficult to cover a short municipal position. B) they are backed by the full faith and credit of the issuing authority. C) Municipal Securities Rule-making Board regulations prohibit short selling. D) They trade over the counter.
A) thin markets may make it difficult to cover a short municipal position.
Which of the following statements regarding the flow of funds found within a municipal trust indenture are true? 1. It describes the disbursement of funds for revenue bond issues. 2. It describes the disbursement of funds for general obligation issues. 3. It is found within the official statement. 4. It is found within the bond contract. A. I and IV B) II and III C) II and IV D) I and III
A. I and IV
A municipal finance professional (MFP) is A) an employee of the Municipal Securities Rulemaking Board (MSRB) responsible for broker-dealer compliance regarding MSRB rules. B) an associate of a broker-dealer engaged in municipal securities representative activities other than retail sales. C) an elected official of a municipality with decision-making responsibilities regarding municipal issues. D) a registered representative engaged in the sale of municipal securities to public customers.
B) an associate of a broker-dealer engaged in municipal securities representative activities other than retail sales.
Your customer, a resident of New York, wants to open up a Section 529 plan for his 10-year-old son. Because his son wants to attend Notre Dame, your customer wants to start a plan sponsored by the state of Indiana. You should A) explain that the potential federal tax benefits available to residents of New York may not be available when opening out-of-state plans. B) explain that the potential state tax benefits available to residents of New York may not be available when opening an out-of-state plan. C) open the plan as instructed by your customer. D) not open the plan.
B) explain that the potential state tax benefits available to residents of New York may not be available when opening an out-of-state plan.
The call provisions of a municipal issue would be detailed most completely in A) the official notice of sale. B) the bond resolution. C) the legal opinion. D) The Bond Buyer.
B) the bond resolution.
A city has issued bonds to construct a new sewage treatment facility. If the bonds are not backed by the full taxing authority of the city, all of the following statements about the bond issue are true except A) the interest on these bonds is not considered a preference item for the alternative minimum tax. B) the disbursement of principal and interest payments must be approved semiannually by the state public service commission. C) if earnings fall short of the amount needed to make principal and interest payments, the debt service reserve can be used. D) there is no debt limitation on the issue.
B) the disbursement of principal and interest payments must be approved semiannually by the state public service commission.
A city has issued bonds to construct a new sewage treatment facility. If the bonds are not backed by the full taxing authority of the city, all of the following statements about the bond issue are true except A) the interest on these bonds is not considered a preference item for the alternative minimum tax. B) if earnings fall short of the amount needed to make principal and interest payments, the debt service reserve can be used. C) the disbursement of principal and interest payments must be approved semiannually by the state public service commission. D) there is no debt limitation on the issue.
C) the disbursement of principal and interest payments must be approved semiannually by the state public service commission.
Which of the following statements regarding a municipal variable-rate demand obligation are true? 1. Interest payments are tied to the movements of another specified interest rate. 2. Interest payments are tied to the movements of an underlying stock or index. 3. The coupon rate stays the same for the life of the demand obligation, and the price fluctuates. 4. The coupon rate of the bond changes, and the price remains stable. A. II and IV B) I and III C) II and III D) I and IV
D) I and IV
A municipality's net total debt is calculated as A) the total debt plus self-supporting debt plus sinking fund accumulations minus overlapping debt. B) the total debt plus self-supporting debt minus sinking fund accumulations minus overlapping debt. C) the total debt minus self-supporting debt plus sinking fund accumulations plus overlapping debt. D) the total debt minus self-supporting debt minus sinking fund accumulations plus overlapping debt.
D) the total debt minus self-supporting debt minus sinking fund accumulations plus overlapping debt.
In a negotiated municipal bond underwriting, all of the following are true except A) the municipality appoints an investment banker or broker-dealer to underwrite the offering. B) the underwriter works with the issuer to establish the offering price. C) the underwriter works with the issuer to establish the interest rate. D) the underwriters may also be financial advisors to the municipality and receive both advisory fees and underwriting fees.
D) the underwriters may also be financial advisors to the municipality and receive both advisory fees and underwriting fees.
An investor has purchased a municipal certificate of participation (COP). COPs can be characterized by all of the following except A) the holder of the COP participates in lease or loan payments from a specific piece of equipment or facility purchased or built by the municipality. B) they are a form of municipal revenue bond. C) the holder of a COP could foreclose on the asset generating the revenue in the case of default. D) they would require voter approval before a municipality could issue them.
D) they would require voter approval before a municipality could issue them.
