final exam 1 Flashcards
A change in interest rates would have the greatest yield change on which of securities
Yields on short-term debt are more sensitive to changing interest rates than yields on long-term debt. A variable-rate demand obligation (VRDO) adjusts its rates to current market rates on a regular basis.
technology fee for both customer sales and interdealer sales is
$1.00 per transaction
What type of economic indicator is industrial production
Coincident
What type of political activities are permitted/denied for an MFP
MSRB rules prohibit MFPs from directly soliciting contributions for political candidates. MFPs may perform volunteer work that is not directly related to campaign solicitations
If general obligation bonds are to be analyzed, the credit analysis would be affected by which of the following factors
The tax collection record and the debt to real estate value ratios are two factors that would be considered when analyzing general obligation bonds. The tax collection record informs the analyst of the tax bases being used by the municipality as a comparison of prior years tax bases and against other municipalities. The debt to real estate value ratios help the analyst study the relationship of debt to real estate valuation of the municipality and the municipality’s ability to meet its debt compared with the real estate wealth of the municipality
two components that are used for the credit analysis on revenue bonds
Feasibility studies
Debt Service Coverage Ratio
Time of Formal Award
For competitive issues
For negotiated issues
For competitive issues, the later of the time the issuer announces the award or the time the issuer notifies the underwriter of the award
For negotiated issues, the later of the time the contract to purchase the securities from the issuer is executed or the time the issuer notifies the underwriter of its execution
would increase most sharply in price if interest rates decline?
Bond prices and interest rates have an inverse relationship. As prices go up, yields go down; as prices go down, yields go up. The bond that has the greatest potential to rise in price is the long maturity, discount bond.
An issuer of municipal securities has failed to disclose material information in its official statement.
what act applies
This would be a violation of the antifraud provisions of the Securities Act of 1933
Trades in municipal securities that have a limited market are still subject to the Best Execution Rule. In order to comply with the rule, what is the BEST course of action for a dealer to take when executing a trade involving a limited market security
Contact the dealers with which it had previously traded this security
Direct debt
is all debt issued by the municipality, both general obligation and revenue
Net direct debt
Net direct debt is direct debt minus self-supporting debt (revenue issues) and notes
Property assessment rates increasing usually denotes
that the municipality has not been receiving enough funds to meet its budget and needs to increase taxes to avoid running the budget at a deficit
A syndicate manager must disclose to syndicate members certain information concerning allocation of securities Within
Within two business days from the date of sale
A system repo refers to
A system repo refers to the FOMC trading desk’s purchase of government securities from nonbank dealers with an agreement that the dealer will repurchase them from the Fed (usually the next day). The initial and immediate effect of this is an increase in the money supply.
The matched sale is
the opposite of the system repo. Usually selling with an agreemenbt to buy back later
The matched sale is
the opposite of the system repo. Usually selling with an agreement to buy back later
A city passes a law allowing it to issue a new municipal bond.
What type of bond is it and what power is used
general obligation bond.
statutory power.
The tool most commonly used by the FRB to regulate the amount of money and credit in the banking system is:
Open market operations
The term monetary base, when used in reference to the money supply
The sum of currency in circulation plus deposits held by banks and other depository institutions in their accounts at the Fed
The Federal Reserve Board was given the authority to set margin requirements according to the provisions of the:
Securities Exchange Act of 1934
A MIG rating applies to a:
municipal notes.
If an OID is purchased with a call premium of 104 and then called what does the investor receive.
f this bond is called, the investor will receive 104% of the compound accreted value, which is equal to the original value of the bond plus the annual accretion (interest earned, but not received) to date. However, if the bond is not an OID and is called, the investor will receive 104% of par ($1,040).
MSRB suitability G-19 does not consider what to be investment strategies
General comparisons between a tax-exempt bond and a taxable bond
Estimates of future retirement needs
Assessment of a customer’s investment profile
Historic differences in the return of asset classes
Effects of inflation
Basic concepts such as risk
