Unit 6 Muni's
100 VALDEZ ALASKA MARINE TERM REV P/R @102 6.000 7/01/15 The P/R @102 means the bonds are: A) pre-refunded at a dollar price exceeding par. B) callable at 102.6. C) partially called at a premium. D) puttable by retail customers at $1,020.
A
A municipal security legal opinion covers which of the following? I. Feasibility of public works projects. II. Creditworthiness of the issuing municipality. III. Tax status of the municipal debt. IV. The constitutionality and legality of the municipal debt. A) III and IV. B) I and II. C) II and III. D) I and IV.
A
A municipality considering a new offering of revenue bonds that must meet the additional bonds test (open-end covenant) must know that: A) applicable revenues must cover the debt service on the outstanding bonds plus the amortization of principal and interest on the new bonds multiplied by a preset multiple. B) an analysis of the existing bonds outstanding must be done by a qualified analyst before the sale of additional bonds. C) additional bonds can only be issued as junior lien bonds if they are backed by the same collateral and revenues. D) additional general obligation bonds cannot be issued.
A
A qualified legal opinion issued for a municipal bond underwriting means that the: A) legal opinion is qualified with restrictions and conditions. B) bond attorney is qualified to express his opinion on the bond. C) revenue bond issue has certain debt limitations . D) bond counsel is considered competent.
A
All of the following statements regarding industrial revenue bonds 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 build facilities that will be owned by the municipality but leased to a local corporation. 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 provide local industries with funds for expansion.
A
All of the following statements regarding municipal bond official statements are true EXCEPT: A) an official statement must be delivered only upon request of a retail customer. B) all retail purchasers of a new municipal bond issue must receive a final official statement. C) a retail customer must receive an official statement no later than the settlement date. D) the MSRB does not require the preparation of a final official statement for new municipal bond issues.
A
All of the following would be found in a bond resolution for a new municipal issue EXCEPT: A) the costs to be incurred by the issuer in connection with the offering. B) a description of the issue. C) the issuer's obligations to bondholders. D) covenants to which the issuer must adhere.
A
Badentown is planning to raise money in 3 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) Bond anticipation note. B) Limited tax bond. C) Special assessment bond. D) Construction loan note.
A
Capital gains on municipal bond transactions are: A) subject to tax as would be any other capital gain. B) taxed at the state and local levels only. C) taxed at the federal level only. D) untaxed.
A
If an investor purchases a bond anticipation note (BAN) that matures in one year, when will the investor collect the interest? A) At maturity. B) Monthly. C) Quarterly. D) Semiannually.
A
Revenue bonds may be called for all of the following reasons EXCEPT: A) the issuer has reached a statutory debt limit. B) a provision in a sinking fund agreement calling for a partial call. C) interest rates have fallen. D) the facility has been destroyed.
A
The interest that municipal securities pay is: A) federally tax exempt. B) exempt from both state and local taxation. C) not taxed at the state, local, or federal levels. D) fully taxed.
A
The real value of property within the city limits is $100 million. The city uses a 50% assessment rate. A 10 mill tax rate will provide tax revenues of: A) 500000. B) 50000. C) $1 million. D) 5000.
A
Which of the following bonds may be secured by a leaseback arrangement? A) Lease-rental bonds. B) Variable-rate demand obligations. C) Housing authority bonds. D) Toll-bridge bonds.
A
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 bond issue will mature within the useful life of the sewage plant. 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
A municipality that has issued GANs, short-term municipal notes, does so in expectation that the debt service will be paid by the receipt of funds attained: A) through the issue of long-term bonds. B) via grants from the federal government. C) from both tax and other anticipated revenue. D) from future tax revenue.
B
An example of overlapping debt would be a school district and: A) a water pollution control facility. B) county general debt. C) corporate debt of the county's largest employer. D) a local power plant.
B
An investor has purchased a municipal certificate of participation (COP). COPs can be characterized by all of the following EXCEPT A) they are a form of municipal revenue bond B) they would require voter approval before a municipality could issue them C) 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 D) the holder of a COP could foreclose on the asset generating the revenue in the case of default
B
The flow of funds on a municipal revenue issue is outlined in the A) prospectus. B) indenture. C) syndicate letter. D) offering circular.
B
The trust indenture of a revenue bond will show all of the following EXCEPT the: A) rate covenant. B) reoffering yields. C) application of flow of funds. D) revenue pledge.
B
Variable rate municipal bonds are subject to all of the following risks EXCEPT: A) default. B) interest rate. C) legislative. D) liquidity.
B
Voter approval may be required for new bond issues for construction of which of the following? I. Airports II. Turnpikes III. State prisons IV. Public high schools. A) I and III. B) III and IV. C) I and II. D) II and IV.
B
Which of the following documents would include information about the issuer's financial condition? A) Trust indenture. B) Official statement. C) Bond resolution. D) Notice of sale.
B
All of the following regarding the official statement for a new municipal issue are true EXCEPT that it: A) meets disclosure requirements for purchasers of the new issue. B) must include information about the offering's call provisions. C) is also called a prospectus. D) can be used to review the issue's creditworthiness.
C
An example of a taxable bond issued by a municipal government is: A) Series EE bonds. B) A tax anticipation note (TAN). C) A Build America Bond (BAB). D) A general obligation bond (GO).
C
Each of the following must be disclosed to customers purchasing a negotiated new issue EXCEPT: A) the initial offering price of each maturity. B) the compensation received as agent. C) the management fee. D) the underwriting spread.
C
If an indenture has a closed-end provision, this means that: A) a sinking fund must be established. B) no additional bonds may be issued. C) additional issues will have junior liens. D) the bonds must be called before maturity.
C
Investor information about the financial condition of a municipal issuer is most likely found in the: A) "The" "Bond Buyer". B) legal opinion. C) official statement. D) official notice of sale.
C
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 debt service. B) the operations and maintenance. C) the optional call provisions. D) the debt service reserve fund.
C
The call provisions of a municipal issue would be detailed most completely in the: A) legal opinion. B) "Bond Buyer". C) bond resolution. D) official notice of sale.
C
The trust indenture of a revenue bond includes a statement explaining rates will be maintained at a level sufficient to cover the debt service and operating expenses. This statement would be found in that part of the indenture dealing with the: A) official statement. B) flow of funds. C) bond covenants. D) feasibility study.
C
Under MSRB rules, a final official statement must be: A) delivered to customers on or before trade date. B) sent to customers on or before trade date. C) delivered to customers on or before settlement date. D) sent to customers on or before settlement date.
C
Whether funds should be allocated to support the debt service on a moral obligation bond in default is usually determined by the: A) state governor. B) courts. C) state legislature. D) trustee.
C
A customer purchased a full faith and credit bond. This bond would be known as a: A) revenue bond. B) moral obligation bond. C) sinking fund bond. D) general obligation bond.
D
A double-barreled bond would be defined as: A) a bond of a foreign issuer that is backed by the U.S. government with the interest payable either in dollars or in foreign currency. B) one that is exempt from both federal and state taxes. C) a corporate bond that pays interest from ordinary income and revenue received from operating a facility for a municipality. D) a bond that has its principal and interest backed by revenues of a facility and the general taxing authority of a municipality.
D
A municipal revenue issue's flow of funds statement is contained in the: A) notice of sale. B) legal opinion. C) agreement among underwriters. D) bond contract.
D
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
All of the following sources of revenue could be used to service general obligation debt EXCEPT: A) fines. B) sales taxes. C) ad valorem taxes. D) user charges.
D
All of the following terms are associated with general obligation (GO) bonds EXCEPT: A) limited tax bond. B) coterminous debt. C) voter referendum. D) protective covenants.
D
Hospital revenue bonds may be backed by: I. ad valorem taxes. II. operating revenues. III. special taxes. IV. tolls. A) I and IV. B) II and IV. C) I and III. D) II and III.
D
In the underwriting of a municipal bond, which of the following is determined by the issuer rather than the underwriter? A) Net interest cost. B) Yield to maturity. C) Underwriting spread. D) Maturity.
D
Municipal bonds that are backed by the income from specific projects are known as: A) income bonds. B) general obligation bonds. C) debenture bonds. D) revenue bonds
D
New issues of municipal bonds are exempt from each of the following EXCEPT: A) U.S.A. state registration requirements. B) Securities and Futures Authority (SFA) requirements. C) Securities Act of 1933 registration requirements. D) Securities Exchange Act of 1934 antifraud provisions.
D
The bond resolution includes all covenants between the: A) bond counsel and the bondholders. B) issuer and the bond counsel. C) issuer and the MSRB. D) issuer and the trustee acting for the bondholders.
D
Which of the following is NOT a source of revenue for a municipal revenue bond issue? A) Assessments. B) Fees. C) Tolls. D) Ad valorem taxes.
D
Which of the following municipal bonds may be paid by a state's legislative apportionment of funds to service the debt? A) Industrial development revenue. B) Special tax. C) Special assessment. D) Moral obligation.
D
Which of the following projects is most likely to be financed by a general obligation rather than a revenue bond? A) Public golf course. B) Expansion of an airport. C) Municipal hospital. D) New high school.
D
Who attests to the legality of a bond issue and issues a legal opinion on a proposed new municipal bond issue? A) State Administrator. B) Syndicate manager. C) Case attorney. D) Bond counsel.
D
