Flashcards in 03.1 Municipal Securities Deck (70):
Which of the following is associated with the secondary market?
A. Bond Buyer
B. Broker's broker
C. Notice of sale
D. Bond counsel
A broker's broker executes transactions exclusively with other broker-dealers and not with public investors. Broker's brokers generally do not take inventory positions in securities. Associate them with secondary market trading.
Which of the following is a true statement?
A. Insured Revenue bonds generally yield less than uninsured Revenue bonds
B. A qualified opinion means the bond counsel is qualified by the State's Municipal Securities Evaluation Council to render such opinions.
C. Revenue bonds usually mature beyond the useful life of the facilities builtwith the proceeds raised by selling the bonds.
D. GO bonds yield more than Revenue bonds because they are generally riskier
Insured Revenue bonds generally yield less than uninsured Revenue bonds
An insurance policy that protects against default should make the revenue bonds less risky, right?
What may a municipal securities apprentice do during her first 90 days?
A. Solicit orders from a retail customer with principal approval
B. Receive commissions
C. Accept unsolicited orders from a retail customer
D. Receive a salary
Receive a salary
No transactions with the public, end of story, and no commissions. She can be paid a training wage/salary, but she can't be compensated on the basis of sales until she completes the apprenticeship period and gets the required license (52 or 7).
Which of the following are regulated by the MSRB?
B. Municipal bond issuers
C. Municipal bond underwriters
Municipal bond underwriters
The MSRB regulates bank dealers and broker-dealers by
writing all the rules on how the business of underwriting and trading municipal securities is supposed to function. They don't regulate other Self-Regulatory Organizations, and they can't tell states and cities (issuers) what to do, either.
Your customer purchases a bond at a discount. The bond
matures in 10 years and has been advance refunded. Which yield would be disclosed on the trade confirmation?
A. Yield to maturity or yield to call, whichever is lower
B. Current yield
C. Yield to call
D. Yield to maturity
Yield to call
Once it's been advance refunded, it's going to be called for sure, so you disclose YTC. Maturity isn't going to be reached, so forget about YTM.
All of the following are associated with the primary market except:
B. Bond Counsel
C. Notice ofSale
Markups are charged on bonds trading in the secondary market. The other three all deal with issuing securities, which is the primary market. The issuer publishes a notice of sale to attract the syndicate. The issuer also appoints the bond counsel to take them through the legality of the process.
The only true statement that follows conerning municipal securities is that:
A. They must be issued with a trust indenture
B. They have no exemption under the Act of 1933
C. They must be sold with a prospectus
D. They usually yield less nominally than corporate bonds
They usually yield less nominally than corporate bonds
Municipal securities are generally much safer than corporate bonds, so they yield less. Less risk = less yield. More risk = more yield. Municipal's ARE exempt from the Act of 1933 and, therefore, don't need a prospectus or a cooling off period, etc. The Trust Indenture Act of 1939 only applies to corporate issuers, not municipal issuers.
Which of the following would be included on a "when issued" trade confirmation?
A. Settlement date
B. Dated date
C. Total dollar amount
D. Accrued interest
That is all we would know before the bonds have been created and sold to the buyers on the primary market. Until the underwriters sell the bonds to investors, how would we know the settlement date? Therefore, we can't calculate accrued interest and come up with a total dollar amount. All we know is somebody will receive a certain number of bonds and will pay accrued interest from the dated date up to the day before settlement, whenever we get there.
Your customer is concerned about AMT. You would most likely recommend a municipal bond issued to complete which of the following projects?
A. Convention Center
B. High-end town home community
C. Public school
D. Parking garage
If you make a certain amount of money, you have to fill out an Alternative Minimum Tax (AMT) form. Some of the stuff you thought you were going to enjoy for tax purposes is going to come back and bite you on the backside now in the form of "tax preference items.' Interest on what the IRS considers a "non-essential" or "private purpose" bond
will be added to your AMT form, and you'll be taxed on some or all of it. So, put your AMT customers (most municipal customers are subject to AMT) into general obligation/school bonds. Those are essential. The IRS will play nice on general
Which of the following projects is most likely financed by a
General Obligation (GO) bond?
C. Sports stadium
The one least likely to generate revenue is the one least likely to be issued with a revenue bond. In other words, if the project generates no revenues it needs to be financed with a GO bond. Schools, freeways, and prisons are likely candidates for GO bonds on the exam.
Which of the following projects funded by municipal bonds is least likely to require voter approval?
A. Building a prison
B. Building a public high school
C. Constructing a toll road
D. Building a public middle school
Constructing a toll road
A turnpike is a revenue generator-people pay big money to use those turnpikes (toll roads). so there's plenty to pay the bondholders. So, we'll use revenue bonds for a turnpike, and we don't need voter approval for those. But schools are backed by taxpayers, who get to vote on the issuance of the GO bonds used to construct and finance schools.
A true statement of call and/or put provisions for municipal securities is that:
A. Bonds experience large price declines when rates fall
B. Bonds are usually called when interest rates rise
C. Put features are usually exercised when interest rates fall
D. Put features are usually exercised when interest rates rise
Put features are usually exercised when interest rates rise
As interest rates rise, bond prices fall. When prices fall, folks who hold puttable bonds often put/sell the bonds back to the issuer for more than they're currently worth. The other three choices all have it backwards.
Which of the following is a double-barreled bond?
A. Hospital bond backed by revenues and full faith and credit of the issuer
B. A bond backed by the issuer's full faith and credit
C. Section 8 bond
Hospital bond backed by revenues and full faith and
credit of the issuer
If we point revenues AND full faith and credit at the problem of paying debt service, it's like we're aiming a double-barreled shot gun at the sucker. The issuer has to be the one pointing both barrels, though, which is why the other three choices are NOT double-barreled. They're issued by a city and guaranteed by a different government, the federal government.
An inaccurate statement concerning MSRB regulations is that:
A. An apprentice may not receive commissions
B. An apprentice may receive commissions for retail purchases initialed by a principal
C. Municipal dealers are not required to secure the best price for their customers
D. Trades that did not occur should not be reported
An apprentice may receive commissions for retail purchases initialed by a principal
Just tell the exam that an apprentice may NOT receive commissions, and everybody'll be happy.
The principal at a municipal securities firm must approve
which of the following?
A. Listings of offerings
B. Abstract of the official statement
C. Preliminary official statement
D. Official statement
Abstract of the official statement
The issuer prepares both preliminary and final official statements, so those aren't subject
to principal approval. Listings of offerings for the secondary market are just straight-up facts which
bonds for sale at which price. Principals approve advertising, which might be misconstrued by a customer through implications and unintended consequences.
To whom must a customer direct a request for a copy of
the MSRB rulebook?
B. Fully-registered compliance principal
All the customer has to do is
ask the firm for a copy of the rulebook, and the firm sends it. We recommend that you read the online version at www.msrb.org. This plus www.bondbuyer.com can really help your understanding of municipal securities, the largest section on the Series 7.
Which of the following is a true statement concerning municipal securities?
A. They are often sold short due to their substantial liquidity
B. They are subject to Reg T requirements
C. Recommending municipal securities to a low-income, low tax-bracket client is a violation
D. They are subject to reporting requirements under the Act of 1934
Recommending municipal securities to a low-income, low tax-bracket client is a violation
Recommending municipal bonds to a low-income, low tax-bracket investor violates the suitability requirements. Municipal's are for high tax- bracket, high-income customers looking for income, safety, and tax advantages.
Which of the following has liability for unsold bonds?
A. Underwriter in a best efforts underwriting
B. Member of the syndicate in a firm commitment
C. Syndicate manager in a best efforts underwriting
D. Member of the selling group in a firm commitment
Member of the syndicate in a firm commitment
Members of the selling group never have liability. Syndicate
members have liability only in firm commitments, where they've agreed to either sell the bonds to investors or buy them themselves.
A "deceased" municipal bond has been:
"Defeased" can also be referred to as "advance" or "pre-refunded." A "covenant of defeasance" allows the issuer to advance, or pre-refund an issue of bonds.
When an issue of municipal securities is oversold, orders generally are given the following (from highest to lowest) priority:
II. Syndicate or group net
A. Ill, II, IV, I
B. I, II, III, IV
C. IV, Ill, II, I
D. Ill, II, I, IV
Ill, II, I, IV'
Please Sell Da' Muni's:
The principal at a municipal securites firm would do all of the following except that he/she would NOT:
A. Approve the preliminary official statement
B. Approve each new account
C. Review the copy of a newspaper advertisement
D. Approve customer transactions
Approve the preliminary official statement
The issuer prepares both the preliminary and official statement. The principal only approves things prepared by
All of the following projects would probably be funded with bonds awarded by a competitive sealed bid except
C. Public school
This is really asking which project is probably funded by a revenue bond. The answer, again, is the turnpike/tollroad project.
Competitive bids would most likely be required when bonds are issued to fund which of the following projects?
A. Public school
B. Golf course
C. Sports stadium
This is really asking which project is probably a general obligation bond, which is usually underwritten under a competitive. sealed bid. A public school is probably the exam's favorite example of a general obligation bond project.
What would an analyst look at when determining the creditworthiness of a General Obligation bond?
A. Flow of funds statement
B. Public's attitude toward debt, taxes
C. Debt service coverage ratio
D. Feasibility studies
Public's attitude toward debt, taxes
A revenue bond would have a flow of funds statement and a feasibility study. GO's are backed by taxes, so what is the public's attitude toward carrying debt and paying taxes to cover it?
A municipal securities firm is about to open an account for a registered representative of another municipal securities finn. All of the following actions should be taken by the executing member firm except:
A. Send duplicate trade confirmations to the employing member
B. Notify the employing member in writing
C. Fill out a new account form
D. Obtain written permission from the employing member
Obtain written permission from the employing member
Notification is required, not permission. The firm also has to follow any special instructions the employing broker-dealer sends in writing.
Ashton, North Dakota has issued revenue bonds with an indenture that stipulates that emergency funding from the state legislature would be pursued should debt service exceed available revenues. This describes which type of bond?
A. Emergency fund debenture
C. Moral obligation
D. Sub-subordinated debt
A "moral obligation" means that the state legislature or city council might appropriate money if the revenues fall a little short. It's a moral obligation, not a legal requirement. So the investors' chances of getting money for their bonds is left up to the morality of politicians.
When a customer purchases an OID, he may be required to pay accrued interest:
I. From the settlement date
II. From the dated date
III. Through the day before settlement
IV. Up to the day as determined by the principal of the firm with the largest position
A. I, Ill
B. II, Ill
C. II, IV
D. I, IV
"OID," means "original issue discount" bond, which gives you the "new issue" clue you need to figure this out. For a new issue, investors often pay accrued interest from the dated date up to-not including-the settlement date.
Which of the following is usually the largest piece of the
A. Manager's fee
B. Additional takedown
C. Total takedown
A nasty question. "Total takedown" includes
TWO pieces additional takedown and concession. Of the three main pieces manager's fee, additional takedown, concession, the concession would be the largest. The only member Who can make the total spread is the managing underwriter. The maximum that the other members can make is the total takedown, but they have to sell the bond themselves to get both of the pieces included. If they let a selling group member make the sale. they concede that piece to the selling group. Concede = concession, right?
Which of the following is usually the smallest component of the spread?
A. Additional takedown
B. Total takedown
C. Selling concession
D. Manager's fee
The manager's fee isthe smallest piece of the spread. Of course, the manager is still going to make the most money. The manager usually takes the biggest allotment of bonds, and they get the manager's fee off every bond sold. Plus, they can make the total spread on any
bond they sell themselves.
Your firm participates in a syndicate with terms stated in
the release letter for a 1/4 point additional takedown and a 1/2 point concession. If your firm sells $200,000 worth of bonds, they will make:
Just do it step-by-step. First, does the firm make both pieces of the spread when they sell? Yes. What are both pieces (3/4pt) worth? $7.50. How many bonds in 200K par value? 200. 200 times $7.50 = $1,500.
A syndicate is trying to determine what yield purchasers will demand when buying the issue of municipal securities, should the syndicate be awarded the bid. This is called:
A. Sweating the details
B. Walking the dog
C. Writing the scale
D. Marking to the market
Writing the scale
That's what it's called, "writing the scale" or "determining the re-offering yields."
What is the difference between NIC and TIC?
A. 500 basis points
B. 5,000 basis points
C. time value of money
D. 50 basis points
Time value of money
TIC-TIC-TIC ... sounds like a clock. TIME value of money.
The financial condition of the municipal issuer is disclosed in the:
A. SEC filing receipt
B. Balance sheet liquidity schedule D
C. Official statement
D. Official notice of sale
This is where the customer can see the financials of the issuer in great detail. It's like a prospectus in some ways, but it is never called a prospectus in Series 7 Land.
When a customer sells a municipal security at a loss and wishes to repurchase another bond within 30 days, all of the following should be considered except:
A. Par value
Nobody cares about par. The other three need to be significantly altered if the investor wants to buy a bond within 30 days. Credit rating is also a factor that should/could be altered.
The net overall or total debt of a municipality consists of:
A. Direct debt plus overlapping debt
B. Bank debt minus corporate debt
C. Direct debt minus overlapping debt
D. Bank debt plus corporate debt
Direct debt plus overlapping debt
Net overall debt is the debt that the municipality is solely responsible for and the overlapping debt it shares with coterminous municipalities.
When an issuer advance refunds a municipal security issue, the funds may be invested in all of the following except:
A. Investment-grade municipal bonds
C. Bank certificates of deposit
Investment-grade municipal bonds
The proceeds have to be escrowed in direct obligations of the U.S. Government or insured bank products.
Bend, Oregon has included a net revenue pledge in the indenture for a recent revenue bond issue. During the first year total revenues are $20,000,000. Expenses are $15,000,000. Interest expense equals $4,000,000 with $1,000,000 for principal repayment. What is the debt service coverage ratio?
A. 15 to 1
B. 3 to 1
C. 1 to 1
D. 20 to 1
1 to 1
For a net pledge, subtract expenses from revenues and compare the result to the debt service. 20-15 = 5. 5:5 is 1:1.
Bend, Oregon has included a gross revenue pledge in the indenture for a recent revenue bond issue. During the first year total revenues are $20,000,000. Expenses are $15,000,000. Interest expense equals $4,000,000 with $1 ,000,000 for principal repayment. What is the debt service coverage ratio?
A. 3 to1
B. 15 to 1
C. 4 to 1
D. 5 to 1
4 to 1
Just take the revenue and compare it to the debt service for a gross pledge, since debt service is paid right off the top. 20 to 5 = 4:1 .
If a revenue bond issue is sold under a closed-end covenant:
A. Further bonds may be issued as "junior liens"
B. No further bonds may be issued without SEC intervention
C. No further bonds may be issued
D. Further bonds may be issued with equal status
Further bonds may be issued as "junior liens"
Any new bonds will have junior status/liens as creditors, unless we can get the original bondholders to agree to give the new bondholders equal claims against the facility's assets. Under an "open-end" covenant, we just have to pass the "additional bonds test." If so, we can issue new bonds with equal status.
A homeowner's house has a market value of $1 million. The municipality assesses at 20% and charges 6 mills. What is the homeowner's annual property tax bill?
20% of $1 mm is $200,000. $200,000 times .006 = $1,200. "Mill" means "thousand". There is a "6" in the thousandth place for 6 mills.
A bridge built with the proceeds of a revenue bond issue has tragically collapsed due to a tropical storm. The bonds are called, as covered by which of the following clauses in the bond indenture?
B. Weather-induced clause
C. Market out clause
D. Catastrophe clause
Sounds like a catastrophe, doesn't it? A "market out
clause" allows underwriters to abandon an underwriting if something unforeseen puts the underwriting in jeopardy. Two of the choices were totally made-up, just as they do on the Series 7.
All ofthe following would be found in the agreement among underwriters except the:
A. Additional takedown
B. Legal opinion
C. Liability for unsold bonds
D. Selling concession
Associate the legal opinion with the issuer. That's who pays for and gets the legal opinion.
Which of the following should not be ignored when
B. All choices listed
C. State of residence
D. Credit rating of the bond
All choices listed
None of these should be ignored, so all of them should NOT be ignored.
Which of the following debt securities offers tax-free interest at the federal level?
C. GO bonds
GO bonds are used for "public purpose, essential services," so the interest is tax-free at the federal level.
When a member firm sells a customer municipal bonds from inventory, it must:
A. Take into consideration the total dollar amount of the transaction in order to determine the markup
B. Indicate the bond's rating from at least two recognized ratings agencies
C. Disclose the commission on the trade confirmation
D. Follow the 5% FINRA guideline
Take into consideration the total dollar amount of the transaction in order to determine the markup
When selling from inventory, the firm charges a markup, not a commission. Municipal securities are exempt from the FINRA 5o/o guideline. Bond ratings do not have to be included on a trade confirmation.
The "net overall debt" of a municipality is that municipality's:
A. Bond issues that have been pre-refunded
B. Direct debt minus over1apping debt
C. Net direct debt plus overlapping debt
D. Cash and equivalents minus long- term obligations
Net direct debt plus overlapping debt
Some things are really memorization points. Remember that a bond analyst considers the municipal issuer's direct debt plus overlapping debt when assigning a rating to a general obligation bond.
Which of the following describes a nominal quote for a municipal security?
A. Firm bid or offer
B. Approximate market price
C. Likely bid or offer
D. Subject bid or offer that must be reconfirmed before trading at that price
Approximate market price
A "nominal quote" is not a bid or offer; it's just an indication of the approximate market value for the security.
The difference between the syndicate's bid and "production" is known as the"
A. Dollar bid
B. Total takedown
"Production" is a term referring to the price at which the syndicate re-offers the bonds to the public. The difference between this and the price the syndicate pays to the issuer is the "spread."
In a divided municipal syndicate account, what does the syndicate manager do if the offer does not sell completely?
A. Confirms the bonds to each member based on its participation
B. Auctions the bonds to the other syndicate members
C. Returns the unsold bonds to the issuer in a firm commitment
D. Confirms the bonds to the members who failed to sell them
Confirms the bonds to the members who failed to sell them
The members who didn't sell the bonds will have to take the bonds they couldn't sell in a divided or 'Western" account.
What is the term used to refer to the annual reduction in a municipal bond investor's cost basis on a bond purchased in excess of par value?
A. Compound amortization
B. Straight-line amortization
C. Accelerated depreciation
D. Straight-line accretion
The cost basis is reduced by the same amount each year on a municipal bond purchased at a premium. Straight-line amortization.
Which of the following is not associated with the secondary market for municipal securities?
B. Official notice of sale
C. RTRS (real-time transaction reporting system)
D. Broker's broker
Official notice of sale
The official notice of sale is associated with the primary market. In it, an issuer announces that it needs to raise a certain dollar amount and return the principal according to a stated schedule. For a competitive bid, syndicates submit bids. For a negotiated underwriting, the terms are negotiated between the syndicate and the issuer.
Natalie North is considering the purchase of a general obligation bond yielding 4.5o/o. If she is in a 30% marginal tax bracket, a corporate bond would have to yield how much to be equivalent?
Take the 4.5% (.045) and divide it by 70% (.70). That is Natalie's tax-equivalent yield.
Which of the following is an advantage of a variable-rate municipal security?
A. The bonds are convertible
B. Market price is generally stable
C. The bonds are non-callable
D. Interest is generally exempt from all taxation
Market price is generally stable
Bond prices only need to adjust if the nominal yield is
fixed. If the rate paid adjusts to current interest rates, the price should remain near par.
An official notice of sale would contain:
B. Re-offering yields on each maturity
C. Agreement among underwriters
D. Amount of the good faith deposit
Amount of the good faith deposit
The notice of sale is published by the issuer in the Bond Buyer. It contains the information needed by a syndicate interested in placing a bid. The syndicate will determine the spread and the re-offering yields IF and when they win they bid for the bonds.
Avariable-ratemunicipal security is not subject to which of the following risks?
A. Interest rate
If the rate adjusts regularly to reflect the current interest rate environment, the market price should remain stable. But, tax code changes could still affect the securities (regulatory risk). the issuer could suffer a credit downgrade, and it may become difficult to sell the bonds in a hurry for a good price (liquidity).
A municipal securities dealer purchases a block of bonds at 92 5/8 and immediately resells them at 93. In this case, the dealer's profit is:
A. $3.75 per bond
B. $1.25 per bond
C. $5.00 per bond
D. $7.50 per bond
$3.75 per bond
The bond was sold for "3/8ths" more than the dealer paid. 3/8ths = $3.75.
A "limited tax bond" is limited in the sense that:
A. Only a specified tax may be used to retire the bonds
B. Only accredited investors may purchase the bonds
C. The annual increase in par value is fixed
D. Only a portion of the interest is tax- exempt to investors
Only a specified tax may be used to retire the bonds
A "limited tax" bond issue may only be able to use sales tax-- but not income tax--to retire the bonds. Such bonds typically have to offer higher yields than general obligation bonds backed by the full taxing authority of the issuer.
When a customer purchases a municipal security, your firm's trade confirmation must, according to MSRB rules, include all of the following information except:
A. The firm's address and other contact information
B. Lower of yield-to-maturity or yield-to-call
C. The price the firm paid to acquire the bonds
D. Whether the firm acted as principal or agent in the transaction
The price the firm paid to acquire the bonds
The confirmation does not have to disclose the price the firm paid for the bonds. But it must disclose the yield on the bond, whether the firm acted as agent or principal, and the firm's contact information. It's a confirmation of a trade, so it needs to be detailed and allow the other side to easily inquire about the terms of the trade.
If a village will raise money through an upcoming bond
issue in the next few months to build a water park, the village could raise money now to perform basic site preparation by selling:
A. Construction loan notes
B. Limited tax bonds
C. Bond anticipation notes
D. Special assessment bonds
Bond anticipation notes
The money they borrow through the BANs (bond anticipation notes) will be paid off with the proceeds of the upcoming bond sale.
A municipal security is offered at 101 1/8 at which price the basis is 4.35. Therefore, the nominal yield is:
A. Lower than 4.35%
B. Higher than 4.35%
C. Equal to the current yield
Higher than 4.35%
Just a confusing way of asking what happens when bond prices rise--their basis or yield falls. if the yield/basis is 4.35%, the nominal yield is higher than that. Current yield is also slightly below the nominal yield here--not equal to it.
What is true of a capital gain taken on a tax-exempt municipal security?
A. It is taxable only at the state and local levels
B. It is tax-exempt at the federal level
C. It is taxed as a capital gain
D. It is not taxed
It is taxed as a capital gain
There is nothing special about municipal bond capital gains- only the interest paid is subject to exemptions. In other words, investors who buy low and sell high are taxed as they would be when taking profits on corporate bonds, stock, etc.
One of your investing customers is in the top marginal tax bracket and would like to maximize her after-tax interest. You would least likely recommend that she purchase:
A. Turnpike Bonds
C. School Bonds
D. Industrial Development Bonds
Industrial Development Bonds
IDBs/IDRs often subject investors to tax problems, as the tax code tends to view them as "private purpose" bonds that benefit a corporation rather than the residents of the municipality.
An investor in the 28% bracket is considering the purchase of a corporate bond yielding 5.5%. If he, instead, purchased a bond issued by his state of residence, the tax-free equivalent yield would be:
Take the 5.5% yield (.055) and multiply it by 72% (.72). The tax-free equivalent yield is also called the "after-tax yield."
In a municipal securities offering, the "reo-ffering yield" is:
A. The main factor in selecting the undeiwriter
B. The coupon rate structure of a serial maturity
C. The yield offered to investors buying bonds from the syndicate
D. The anticipated fluctuation in market price given a change in interest rates
The yield offered to investors buying bonds from the syndicate
The syndicate buys the bonds from the issuer and re-offers them at a lower yield to investors in order to make a profit (the spread).
In a municipal securities offering, which of the following is an example of a "group net order"?
A. An order offered below the public offering price to a member of the public
B. An order from a syndicate member firm to purchase bonds for its own account
C. An order credited to the firm that received it
D. An order credited to the syndicate
An order credited to the syndicate
The whole syndicate gets credit for a group net order, which is why it has a higher priority than either a "designated" order or a "member" order.
Municipal securities issuers--i.e. school districts--publish an Official Notice of Sale in the Bond Buyer in order to:
A. Comply with the Securities Exchange Act of 1934
B. Attract underwriters to submit negotiated bids
C. Attract underwriters to submit a competitive bid
D. Comply with the Securities Act of 1933
Attract underwriters to submit a competitive bid
The official notice of sale is used to attract underwriters interested in submitting competitive bids where the lowest bidder (lowest NIC or TIC) wins the job.
The unsold balance of a municipal securities offering is typically:
A. Sold by a broker's broker
B. Sold short by the lead underwriter on a pro rata basis
C. Retuned to the issuer in a firm commitment underwriting
D. Confirmed to the firm with the highest level of participation
Sold by a broker's broker
Most municipal offerings are finn commitment, so the
syndicate buys all the bonds from the issuer, period. A broker's broker may be able to sell the bonds the syndicate couldn't place while also keeping the identity of both sides of the transaction protected.
A municipal securities underwriter noting that the "visible supply" has been decreasing lately might accurately conclude that:
A. Yields will likely rise
B. Unemployment claims are down regionally
C. Yields will likely drop
D. Unemployment claims are down nationally
Yields will likely drop
If the supply tightens, buyers will tend to pay higher prices (lower yields).
Interest that a resident of Yuma, Arizona receives from a General Obligation of Scottsdale, Arizona is assumed to be:
A. Exempt from local taxes only
B. Exempt from federal,state,and local taxes
C. Exempt from federal and state taxes
D. Deductible against margin interest
Exempt from federal and state taxes
Hypothetically, Yuma could tax the interest. But it's a municipal bond, so it's exempt from federal income tax. Then, since it's purchased by an issuer in Arizona, it's exempt from Arizona income taxes.