Municipal Debt ?s
All of the following callable municipal bonds are trading at an 8% basis. Which is LEAST likely to be called? A) 6 3/4% coupon rate callable at 100 in 2022 B) 7 1/2% coupon rate callable at 100 in 2022 C) 8% coupon rate callable at 100 in 2022 D) 8 3/4% coupon rate callable at 100 in 2022
A) 6 3/4% coupon rate callable at 100 in 2022
To smooth out cash flow, a municipality will issue all of the following EXCEPT: A) BAN B) RAN C) TAN D) TRAN
A) BAN
New issues of municipal short term notes are available in which form? A) Book entry B) Bearer C) Fully registered D) Registered to principal and interest
A) Book entry
When does an investor receive payment of interest and principal on a Capital Appreciation Bond (CAB)? A) Both interest and principal are paid at maturity B) Interest is paid semi-annually and principal is paid at maturity C) Both interest and principal are paid monthly D) Both interest and principal are paid upon conversion
A) Both interest and principal are paid at maturity
Which ratio test is used to analyze a revenue bond? A) Debt service coverage ratio B) Collection ratio C) Debt per capita D) Debt to assessed valuation
A) Debt service coverage ratio
A hospital has been financed through a revenue bond issue containing a Net Revenue Pledge. Prior to paying Debt Service, all of the following expenses would be deducted by the issuer EXCEPT: A) Depreciation and amortization B) Garbage disposal costs C) Wages D) General expenses
A) Depreciation and amortization
When a municipal issuer defeases its debt in accordance with the terms of the bond contract, it: I terminates the lien that existing bondholders have on pledged revenues II substitutes another source of revenue acceptable to the bondholders III returns the principal amount to the bondholders at the time of the defeasance A) I and II B) I and III C) II and III D) I, II, III
A) I and II
BABs are: I subject to Federal income tax II exempt from Federal income tax III issued in the taxable bond market IV issued in the tax-exempt bond market A) I and III B) I and IV C) II and III D) II and IV
A) I and III
Industrial development bonds: I are backed by rental revenues paid by the corporate lessee II are backed by the municipality's ad valorem taxes III take on the credit rating of the corporate lessee IV take on the credit rating of the municipal lessor A) I and III B) I and IV C) II and III D) II and IV
A) I and III
Which of the following statements are TRUE regarding a municipal bond issue that is advance refunded? I The marketability of the advance refunded bonds will increase II The issuer redeems an old bond issue by advancing funds from the U.S. Government for this purpose III The funds to pay debt service requirements are deposited to an escrow account and used to buy U.S. Government securities IV The funds to pay debt service requirements are deposited to an escrow account and used to buy Municipal securities A) I and III B) I and IV C) II and III D) II and IV
A) I and III
Which of the following statements are TRUE regarding municipal bonds that have been called? I Interest ceases to accrue on the bonds II Interest continues to accrue on the bonds III The holder may redeem the bonds at anytime IV The holder may only redeem the bonds on a regular semi-annual interest payment date A) I and III B) I and IV C) II and III D) II and IV
A) I and III
Mandatory redemption provisions of a municipal bond contract may be met by: I making periodic deposits to a segregated account (sinking fund) II advance refunding the issue III making a tender offer for outstanding bonds A) I only B) I and III C) II and III D) I, II, III
A) I only
Which of the following actions must be taken if a municipality wishes to raise its debt limit? A) Public referendum B) Court order C) Judicial edict D) Tax assessment
A) Public referendum
As stated in the flow of funds found in a revenue bond issue's trust indenture, before the revenues collected are applied to the operations and maintenance fund, revenues are placed in the: A) Revenue Fund B) Debt Service Reserve Fund C) Sinking Fund D) Reserve Maintenance Fund
A) Revenue Fund
A political subdivision wishes to issue a bond backed by taxes on cigarettes and gasoline. It would most likely issue a(n): A) Special tax bond B) Industrial revenue bond C) Special assessment bond D) General obligation bond
A) Special tax bond
All of the following statements are true regarding Construction Loan Notes ("CLNs") EXCEPT: A) When the facility is completed, the permanent financing is added to the outstanding balance ("basis") of the CLNs B) Accrued interest on CLNs is computed on an actual day month / actual day year basis C) The maturity of CLNs is generally 2 to 3 years D) The use of CLNs allows the municipal issuer to reduce its interest cost when constructing a new facility
A) When the facility is completed, the permanent financing is added to the outstanding balance ("basis") of the CLNs
A promise by a municipality to call in a bond issue if the facility built with the proceeds of the offering is condemned, is a: A) calamity call covenant B) rate covenant C) maintenance covenant D) insurance covenant
A) calamity call covenant
Level debt service is best described as: A) debt service remains the same amount each year B) debt service decreases as the years progress C) principal repayments decrease as the years progress D) principal repayments stay the same as the years progress
A) debt service remains the same amount each year
A "qualified" legal opinion is one which: A) gives a conditional affirmation of the legality of the securities B) gives an unconditional affirmation of the legality of the securities C) is given by a qualified bond counsel D) qualifies the issue for a federal tax exemption from taxation
A) gives a conditional affirmation of the legality of the securities
Under a gross revenue pledge, bondholders have a first lien on: A) gross revenues B) gross revenues minus operations and maintenance C) gross revenues minus debt service reserve fund D) gross revenues minus deposits to the sinking fund
A) gross revenues
The interest income received from older Industrial Revenue bonds may be taxable to the holder at regular income tax rates if the holder: A) is a "substantial user" of the facility built with the proceeds of the issue B) receives more than $10,000 per year in interest income from the bonds C) has purchased the bonds in a margin account and has borrowed against the position D) is an officer of the issuer
A) is a "substantial user" of the facility built with the proceeds of the issue
The Bond Resolution is the contract between the: A) issuer and bondholder B) bond counsel and issuer C) bond counsel and bondholder D) issuer and Municipal Securities Rulemaking Board
A) issuer and bondholder
An issuer decides to call in an outstanding bond issue under the terms detailed in the bond resolution because interest rates have dropped substantially after issuance. This type of call is a(n): A) optional call B) extraordinary optional call C) mandatory call D) extraordinary mandatory call
A) optional call
The formula for a municipality's collection ratio is: A) taxes collected / taxes assessed B) taxes assessed / taxes collected C) taxes assessed * taxes collected D) (taxes collected + assessed property values) / taxes assessed
A) taxes collected / taxes assessed
The flow of funds stated in the trust indenture has payments being made to a sinking fund after the operations and maintenance fund is paid. The sinking fund is where monies: A) to meet debt service requirements are deposited B) to pay extraordinary maintenance or replacement costs are deposited C) to pay for regularly scheduled repairs and replacements are deposited D) "left-over" after all other uses are exhausted are deposited
A) to meet debt service requirements are deposited
Pitter Patter Water Authority "Flow of Funds" Statement 20XX Water Charges:$6,000,000 Interest on Reserve Funds: $2,000,000 Gross revenues: $8,000,000 Operation and Maint: $4,000,000 Net Revenues: $4,000,000 Debt Service: $2,000,000 Addition to Reserves: $2,000,000 If the bonds were issued under a net revenue pledge, how much in funds were available to pay the bondholders for this year? A) $2,000,000 B) $4,000,000 C) $6,000,000 D) $8,000,000
B) $4,000,000
A municipality issues a 30-year zero-coupon bond at deep discount. The bond is callable at 103. The bond is called in Year 10 when its current accreted value is $500. The bondholder will receive: A) $500 B) $515 C) $1,000 D) $1,030
B) $515
A municipality has floated a $200,000,000 revenue bond issue. The annual level debt service requirement is $5,000,000. In the first fiscal year, the municipality has collected revenues of $8,000,000. The "Coverage Ratio" is: A) $200,000,000 / $5,000,000 B) $8,000,000 / $5,000,000 C) $5,000,000 / $8,000,000 D) $13,000,000 / $200,000,000
B) $8,000,000 / $5,000,000
A municipality issues a 30-year zero-coupon bond at deep discount. The bond is callable at 103. The bond is called in Year 10 when its current accreted value is $500. The bondholder will receive: A) $500 B) 103% of $500 C) $1,000 D) 103% of $1,000
B) 103% of $500
The opinion as to the federal tax-exempt status of a municipal bond is provided by the: A) Internal Revenue Service B) Bond attorney C) Underwriter's counsel D) Securities and Exchange Commission
B) Bond attorney
Which statement is TRUE about a Certificate of Participation (COP)? A) COPs are subject to statutory debt limits B) COPs are backed by a pledge of lease revenues C) COPs have a higher credit rating than G.O. bonds of the same issuer D) COPs are full faith and credit obligations of the issuer
B) COPs are backed by a pledge of lease revenues
Who guarantees an Industrial Development Bond? A) Municipal issuing authority B) Corporate lessee C) MBIA D) AMBAC
B) Corporate lessee
From an issuer's standpoint, as the years progress, "level debt service" serial bond issues have: I Decreasing interest payment amounts II Increasing interest payment amounts III Decreasing principal repayment amounts IV Increasing principal repayment amounts A) I and III B) I and IV C) II and III D) II and IV
B) I and IV
Municipal variable rate demand notes: I have a market value which will never go below par II have a market value which will never go above par III have a yield which will never fall below the stated rate IV have a yield which will never rise above the stated rate A) I and III B) I and IV C) II and III D) II and IV
B) I and IV
Which of the following statements are TRUE regarding callable municipal issues? I Bonds are usually called when interest rates have declined II Bonds are usually called when interest rates have risen III Callable bond yields are lower than non-callable ones IV Callable bond yields are higher than non-callable ones A) I and III B) I and IV C) II and III D) II and IV
B) I and IV
Which of the following bond issues would most likely have a mandatory sinking fund? I U.S. Government bond II General Obligation bond III Hospital Revenue bond IV Airport Revenue bond A) I and II only B) III and IV only C) II, III, IV D) I, II, III, IV
B) III and IV only
Which of the following would NOT be considered when evaluating the credit risk of a municipal revenue bond? A) Coverage ratios B) Legislative actions C) Competing facilities D) Management experience
B) Legislative actions
Net Overall Debt of a municipality is: A) Bonded Debt + Overlapping Debt B) Net Direct Debt + Overlapping Debt C) Bonded Debt - Overlapping Debt D) Net Direct Debt - Overlapping Debt
B) Net Direct Debt + Overlapping Debt
A municipality issues a new revenue bond offering that has the same claim on revenues of the facility as a prior bond offering. The new debt issue is known as a(n): A) Junior lien debt B) Parity bond C) Double barreled bond D) Senior lien debt
B) Parity bond
A municipal note that is issued in anticipation of receiving future revenues is a: A) TAN B) RAN C) TRAN D) BAN
B) RAN
During its fiscal year, New York state is experiencing a temporary cash flow shortage, expected to last for 5 months. To meet current obligations, the state would most likely issue: A) General Obligation bonds B) TANs C) CLNs D) Moral Obligation bonds
B) TANs
Which of the following projects would be financed by a general obligation bond issue? A) The construction of a new subway line B) The construction of a new junior high school C) The construction of a new hydroelectric generating plant D) The construction of a new sewage treatment plant
B) The construction of a new junior high school
The flow of funds for a municipal revenue bond offering is set forth in the: A) Official Notice of Sale B) Trust Indenture C) Official Statement D) Legal Opinion
B) Trust Indenture
General obligation bonds issued by local units of government are typically backed by: A) excise taxes B) ad valorem taxes C) pledged revenues D) legislative appropriation
B) ad valorem taxes
A municipal variable rate demand note is a municipal: A) note that may be retired prior to maturity on any interest payment date at the demand of the issuer B) bond that gives the holder a tender option feature, usually at par, as of the reset date C) note that requires the issuer to reset the interest rate to the market rate upon demand of the holder D) bond that allows the issuer to vary the repayment date, upon giving written notice to the holders
B) bond that gives the holder a tender option feature, usually at par, as of the reset date
Mandatory redemption provisions can only be met by: A) advance-refunding the issue B) depositing the required funds to the sinking fund C) pre-refunding the issue D) making a tender offer for the outstanding bonds
B) depositing the required funds to the sinking fund
A "calamity call" is a(n): A) mandatory call B) extraordinary mandatory call C) optional call D) extraordinary optional call
B) extraordinary mandatory call
An "unqualified" legal opinion is one which: A) gives a conditional affirmation of the legality of the securities B) gives an unconditional affirmation of the legality of the securities C) is given by an unqualified bond counsel D) disqualifies the issue from legal issuance
B) gives an unconditional affirmation of the legality of the securities
A pledge that all revenues received will be used for debt service prior to deductions for any costs or expenses is a: A) net revenue pledge B) gross revenue pledge C) rate covenant D) debt service pledge
B) gross revenue pledge
Municipalities would issue tax exempt commercial paper for all of the following reasons EXCEPT to: A) meet a temporary cash shortage due to unforeseen extraordinary expenses B) refund an outstanding bond issue C) provide construction period financing that will be permanently financed by a future bond sale D) smooth out collections of funds that are normally subject to seasonal fluctuations
B) refund an outstanding bond issue
Special assessment bond issues are paid from: A) taxes levied upon all taxable property within the municipality, without limitation as to rate or amount B) taxes levied upon all taxable property within a particular locality, not to exceed the benefit derived from the improvement C) revenues pledged from the operation of a facility built with the proceeds of the issue D) excise taxes placed upon the sale of either alcohol, tobacco, or fuel
B) taxes levied upon all taxable property within a particular locality, not to exceed the benefit derived from the improvement
A municipal revenue bond trust indenture includes an "additional bonds test" covenant. This means that: A) the issuer is prohibited from issuing new debt under any circumstance B) the issuer is prohibited from issuing new debt unless the facility's revenues are sufficient to pay for existing and additional debt C) the issuer is prohibited from issuing new debt unless outstanding bonds are called D) additional debt can be issued without restriction
B) the issuer is prohibited from issuing new debt unless the facility's revenues are sufficient to pay for existing and additional debt
A municipal "broker's broker" does all of the following EXCEPT: A) obtain quotes from other dealers B) trade for its own account C) execute trades as agent for other dealers D) execute trades as agent for institutional clients
B) trade for its own account
A municipality has a tax rate of 12 mills. A piece of real property in the municipality is assessed at $225,000 and has a fair market value of $250,000. The annual tax liability on the property is: A) $120 B) $300 C) $2,700 D) $3,000
C) $2,700
A municipality would defease its debt with all of the following EXCEPT: A) U.S. Government securities B) U.S. Government agency securities C) AAA Municipal securities D) Bank certificates of deposit
C) AAA Municipal securities
Which municipal bond is MOST likely to have a mandatory sinking fund provision in the Trust Indenture? A) Tax Anticipation Notes B) Water District Bonds C) Dormitory Revenue Bonds D) School District Bonds
C) Dormitory Revenue Bonds
An analysis of general obligation bonds would include: I examination of collection ratios II evaluation of engineer's reports III analysis of debt to value ratios IV analysis of debt service coverage ratios A) I and II only B) III and IV only C) I and III only D) I, II, III, IV
C) I and III only
The ratio of net direct debt plus overlapping debt to assessed valuation of property is used to: I analyze general obligation bonds II evaluate the issuer's creditworthiness III evaluate the issuer's overall ability to service its debt burden IV evaluate the issuer's ability to collect taxes owed A) I only B) III and IV only C) I, II, III D) I, II, III, IV
C) I, II, III
Which of the following are sources of income that can be used for debt service on municipal revenue bonds? I User Fees II Special Taxes III Lease Rentals IV Capitalized Interest A) I and III only B) II and IV only C) I, II, III D) I, III, IV
C) I, II, III
Which of the following statements are true regarding Construction Loan Notes ("CLNs")? I The use of CLNs allows the municipal issuer to reduce its interest cost when constructing a new facility II The maturity of CLNs is generally 2 - 3 years III Accrued interest on CLNs is computed on an actual day month / actual day year basis IV When the facility is completed, the permanent financing is added to the outstanding balance ("basis") of the CLNs A) I only B) II and III only C) I, II, III D) I, II, III, IV
C) I, II, III
Which of the following statements best describe the activities of a municipal securities broker's broker? I Municipal broker's brokers assist institutions that wish to buy blocks of municipal bonds II Municipal broker's brokers assist institutions that wish to sell blocks of municipal bonds III Municipal broker's brokers act as agents for their clients IV Municipal broker's brokers trade for their own accounts A) I and II only B) III and IV only C) I, II, III D) I, II, III, IV
C) I, II, III
Municipalities would issue tax exempt commercial paper for which of the following reasons? I To smooth out collections of funds that are normally subject to seasonal fluctuations II To meet a temporary cash shortage due to unforeseen extraordinary expenses III To refund an outstanding bond issue IV To provide construction period financing that will be permanently financed by a future bond sale A) I only B) III only C) I, II, IV D) I, II, III, IV
C) I, II, IV
Revenue bonds may be called for which of the following reasons? I Homeowners have prepaid their mortgages II Interest rates have fallen III The issuer has reached a statutory debt limit IV The facility has been destroyed by fire A) I and II only B) III and IV only C) I, II, IV D) I, II, III, IV
C) I, II, IV
Which of the following sources of income are used to back revenue bond issues? I Excise taxes II Lease rentals III Ad valorem taxes IV Enterprise activity income A) I and III only B) II and IV only C) I, II, IV D) I, II, III, IV
C) I, II, IV
A "double barreled" municipal issue has: I primary backing of a general obligation pledge II primary backing of a revenue pledge III secondary backing of a general obligation pledge IV secondary backing of a revenue pledge A) I and III B) I and IV C) II and III D) II and IV
C) II and III
A municipal variable rate demand note is: I a short term issue II a long term issue III issued at short-term interest rates IV issued at long-term interest rates A) I and III B) I and IV C) II and III D) II and IV
C) II and III
Which statements are TRUE about a Certificate of Participation (COP)? I COPs are considered to be a general obligation of the issuer II COPs are considered to be backed by a revenue pledge III Payments to security holders are contingent on the governing body making an annual appropriation from budgeted funds IV Payments to security holders are not contingent on the governing body making an annual appropriation from budgeted funds A) I and III B) I and IV C) II and III D) II and IV
C) II and III
General obligation bond analysis would consider which of the following? I Protective covenants in the trust indenture II Trend of assessed valuation of property III Ratio of overall debt per capita IV Record of tax collections A) I and III only B) II and IV only C) II, III, IV D) I, II, III, IV
C) II, III, IV
Which of the following are overlapping debts? I Port authority II Park district III Library system IV Road district A) I only B) I, II, IV C) II, III, IV D) I, II, III, IV
C) II, III, IV
Regarding the flow of funds set forth in a municipal bond contract, collected monies would FIRST be deposited to the: A) Operations and Maintenance Fund B) Debt Service Reserve Fund C) Revenue Fund D) Reserve Maintenance Fund
C) Revenue Fund
Which of the following is a promise by the issuer to keep the revenues collected from running the facility separate from other municipal accounts? A) Defeasance covenant B) Catastrophe call covenant C) Segregation of funds covenant D) Sinking fund covenant
C) Segregation of funds covenant
Under a net revenue pledge, once operation and maintenance costs are paid, what is the next item that is paid? A) debt service reserve fund B) reserve maintenance fund C) debt service expense D) renewal replacement
C) debt service expense
The municipal bond counsel opines on all of the following EXCEPT: A) validity B) legality C) feasibility D) tax exempt status
C) feasibility
A municipality would issue a GAN in anticipation of receiving: A) property tax collections B) proceeds from a long term bond sale C) federal transit funding D) federal highway funding
C) federal transit funding
Constitutional debt limits are imposed on the issuance of: A) revenue bonds B) moral obligation bonds C) general obligation bonds D) industrial development bonds
C) general obligation bonds
All of the following are participants that offer municipal bonds in the secondary market EXCEPT: A) bank dealers B) general securities dealers C) issuers D) municipal broker's brokers
C) issuers
The municipal bond counsel opines on all of the following EXCEPT: A) validity B) legality C) marketability D) constitutionality
C) marketability
A municipal bond is issued with a covenant that states "if revenue collections are insufficient, the state legislature has the authority, but not the obligation, to make an annual apportionment of funds necessary to meet debt service requirements." This is a: A) special tax bond B) double barreled bond C) moral obligation bond D) general obligation bond
C) moral obligation bond
When analyzing municipal general obligation bonds of different issuers, it is difficult to use the ratio of Overall Debt / Assessed Valuation because: A) the ratio does not consider a municipality's ability to collect the taxes levied on all real property B) municipalities differ in their method of computing overall debt C) municipalities differ in their method of computing assessed value of properties D) the ratio does not consider the management capabilities of municipal government
C) municipalities differ in their method of computing assessed value of properties
All of the following statements are true regarding a 5% municipal bond purchased at par that has a put option at par EXCEPT the: A) investor's yield cannot rise above 5% B) put would be exercised if interest rates rise C) put option will not affect the market risk of the security D) investor can exercise the put at his or her discretion
C) put option will not affect the market risk of the security
Under the terms of a municipal revenue bond trust indenture, any funds that are appropriated for additions and improvements are required to be deposited to a(n): A) sinking fund B) escrow fund C) renewal and replacement fund D) reserve maintenance fund
C) renewal and replacement fund
Itsy Bitsy Water Authority "Flow of Funds" Statement 20XX Water Charges:$9,000,000 Interest on Reserve Funds: $1,000,000 Gross revenues: $10,000,000 Operation and Maint: $6,000,000 Net Revenues: $4,000,000 Debt Service: $2,000,000 Addition to Reserves: $2,000,000 If the bonds were issued under a gross lien revenue pledge, how much in funds were available to pay the bondholders for this year? A) $2,000,000 B) $4,000,000 C) $9,000,000 D) $10,000,000
D) $10,000,000
Pitter Patter Water Authority "Flow of Funds" Statement 20XX Water Charges:$6,000,000 Interest on Reserve Funds: $2,000,000 Gross revenues: $8,000,000 Operation and Maint: $4,000,000 Net Revenues: $4,000,000 Debt Service: $2,000,000 Addition to Reserves: $2,000,000 If the bonds were issued under a gross lien revenue pledge, how much in funds were available to pay the bondholders for this year? A) $2,000,000 B) $4,000,000 C) $6,000,000 D) $8,000,000
D) $8,000,000
Income sources backing a special tax bond issue could be all of the following EXCEPT: A) Excise taxes B) Sales taxes C) Income taxes D) Ad Valorem taxes
D) Ad Valorem taxes
In a period of rising interest rates, a bond dealer would engage in which of the following activities? I Lower prices in interdealer quote publications such as Bloomberg for municipal bonds II Place "request for bids" in services such as Bloomberg on depreciated positions where the dealer has no current interest III Bid for bonds to cover previously established short positions IV Buy put options on debt instruments to hedge existing long positions A) I and II only B) III and IV only C) I, II, III D) I, II, III, IV
D) I, II, III, IV
Which of the following statements are TRUE regarding a municipal bond issue that is advance refunded? I The security that backs the advance refunded bonds will change after the issue is refinanced II The bondholder's lien on pledged revenues will be defeased in accordance with the terms of the bond contract III The marketability of the advance refunded bonds will increase IV The funds to pay the debt service requirements on the advance refunded bonds are set aside in escrow A) II only B) III and IV only C) I, II, IV D) I, II, III, IV
D) I, II, III, IV
A municipal variable rate demand note: I is considered to be a short term issue II is considered to be a long term issue III gives the issuer the right to call the bond from the holder on pre-set dates IV gives the holder the right to put the bond to the issuer on pre-set dates A) I and III B) I and IV C) II and III D) II and IV
D) II and IV
Municipal variable rate demand notes: I have an interest rate that is fixed throughout the life of the bond II have an interest rate that is reset periodically III are considered short term municipal notes IV are considered long term municipal notes A) I and III B) I and IV C) II and III D) II and IV
D) II and IV
Which of the following statements are TRUE regarding an institution using its endowment as a source of revenues pledged to bondholders? I The endowment fund itself is usually the source of revenue pledged II The earnings on the endowment fund are usually the source of revenue pledged III A water and sewer revenue bond is likely to have an endowment fund IV A hospital revenue bond is likely to have an endowment fund A) I and III B) I and IV C) II and III D) II and IV
D) II and IV
All of the following are evaluated in the feasibility study prepared prior to the issuance of revenue bonds EXCEPT: A) expected demand for the facility B) effect of competing facilities C) expected operating costs of the facility D) bond trust indenture
D) bond trust indenture
When analyzing a general obligation bond, all of the following ratios would be evaluated EXCEPT the: A) collection ratio B) debt per capita ratio C) debt to value ratio D) debt service coverage ratio
D) debt service coverage ratio
Variable rate municipal notes are NOT subject to which of the following risks? A) legislative risk B) default risk C) marketability risk D) interest rate risk
D) interest rate risk
Under the flow of funds in a revenue bond trust indenture, net revenue is defined as gross revenue minus: A) sinking fund expenses B) debt service reserve expenses C) debt service expenses D) operation and maintenance expenses
D) operation and maintenance expenses
Under a municipal revenue bond rate covenant, rates must be set to cover all of the following EXCEPT: A) operation of the facility B) debt service C) maintenance of the facility D) optional sinking fund deposits
D) optional sinking fund deposits
Level debt service is best described as: A) debt service increases as the years progress B) debt service decreases as the years progress C) principal repayments decrease as the years progress D) principal repayments increase as the years progress
D) principal repayments increase as the years progress
All of the following could be overlapping debts EXCEPT: A) school district debt B) water district debt C) county debt D) state debt
D) state debt
Revenue bonds may be called for all the following reasons EXCEPT: A) the facility has been destroyed by fire B) homeowners have prepaid their mortgages C) interest rates have fallen D) the issuer has reached a statutory debt limit
D) the issuer has reached a statutory debt limit
A municipality is at its debt limit and wishes to sell additional bonds. Voter approval is required for the municipality to sell: I Limited tax general obligation bonds II Unlimited tax general obligation bonds III Self-supporting revenue bonds IV Self-supporting industrial revenue bonds
I and II only
A municipality wishes to sell a bond issue that is NOT backed by taxing power. Which of the following bonds could be issued? I Revenue bond II Industrial revenue bond III General obligation bond IV Lease rental bond
I, II, and IV
Which of the following statements are TRUE regarding debt obligations? I Corporations issue revenue bonds II Municipalities issue revenue bonds III Corporations issue income bonds IV Municipalities issue income bonds
II and III
