3 Intro Munies Flashcards by Brandy S

Q

Municipal Securities

who issues?

A

state

local

territories

taxing authorities

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Q

Municipal Securities

interest

yeild

A

not taxable by fed govt

yeild lower than corp or govt

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Q

Municipal Securitites

Expemption - Which Act?

A

Act of 1933

subject to anti fraud in Act of 1934

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Q

Doctrine of

Reciprocal Immunity

Mutual Reciprocity

A

level of govt can tax own interests

municipal sec can only tax on municipal level

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Q

Muni Tax

A

mostly exempt but subect to capital gains

tax exempt if buy bond issued in state you live in

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Q

Muni Tax

Which ones are tax free?

A

Public Purpose

Essential Services

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Q

Muni Tax

Which ones are taxable?

Name of tax?

A

Private Activity

Alternative Minimum Tax (AMT)

sports stadium, facility op by private co.

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Q

dollar bonds

price

backing

issue

A

term bonds quoted by price

some issures establish sinking fund

issued serially

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Q

basis

A

Yeild to Maturity

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Q

Types (5)

A

Gereral Obligations GO’s
Revenue Bonds
Municipal Notes
State & Local Govt Securitits Series SLGS
Build America Bonds BABs

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Q

Municipal Bond

Volatility

A

fluctuate more than

corp. or fed govt.

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Q

Insurance covers

A

principal & interest

FGIC & AGC

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Q

Official Statement

A

important info on new issue

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Q

Munies are traded

A

OTC

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Q

Basis Quote

A

bonds priced YTM

instead of dollar priced

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Q

Dollar Price

Study These Flashcards

A

term bonds quoted on % of par

dollar basis, instead of basis

usually callable before matruity

Q

Capital Gains

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A

Since gains & losses are amortized

no capital gain or loss at maturity.

gain or loss is deducted on annual basis

Q

Capital Gains

Annual Amorization Formula

Study These Flashcards

A

Q

Caculate Capital Gains/Loss

Bond Price = 1200

Term = 10 years

Study These Flashcards

A

Q

Caculate Capital Gains/Loss

Bond Price = 1200

Term = 10 years

Sold after 6 years for 110

Study These Flashcards

A

Q

GO

Tax Equivalent Yield

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A

% int corp bond would need to offer to get = yeild due to tax free status.

Tax Free - divide

Taxable - multiply

Q

GO

Tax Equivalent Yield

Which one is better, GO or Corp?

30% tax bracket
7% GO
9.5% XYZ corp bond

Study These Flashcards

A

Taxed Equivalent - divide

Q

GO

Tax Free Equivalent Yield

What % of int on muni would be better than

30% tax bracket
9.5% XYZ corp bond

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A

Tax Free Equilivant - mutiply