Munis

Question 1

Muni complaints

Answer 1

Settled through arbitration, kept on file for 6 yrs

Question 2

Analyzing GO bonds

Answer 2

1. Taxes
2. Population
3. Fines
4. Property values

Question 3

Other types of munis

Answer 3

Lease revenue, double barreled, special tax, special assessment, moral obligation, PHA, auction rate, BAB

Question 4

Muni quotes

Answer 4

Must be fair and reasonable

Question 5

Amounts and maturities determined by:

Answer 5

Issuer

Question 6

Revenue bonds

Answer 6

No voter approval, no debt ceiling

Question 7

Debt service coverage ratio

Answer 7

Net OR gross revenues/principal & interest

Question 8

Muni notes, 7 types

Answer 8

Short term, one yr or less

Most of these are anticipation - tax, revenue, combo, grant, bond, construction, and principal note, commercial note

Question 9

Muni G 37 rule

Answer 9

May not engage business w/municipal issuer if political contribs have been made w/in last 2 yrs

Negotiated offering only

Question 10

GO bonds

Answer 10

Voter approval, subject to debt ceiling, AKA public activity bonds

Question 11

Muni allocation of orders

Answer 11

1. Pre sale
2. Syndicate
3. Designated
4. Member

Question 12

Secondary muni market

Answer 12

Liquidity risk, not usually sold short

Retail
Interdealer
Institutional
Brokers broker

Question 13

IDR

Answer 13

Industrial development revenue bond - commercial construction, private use, Corp responsible for pay off, credit rating of company, riskiest mini. AKA private activity bond

Question 14

MSRB

Answer 14

Self reg org, 90 day apprentice period, 2 muni principals required (series 53), limited muni rep series 7, full muni rep series 52
ACAT - 3 days to validate, 4 days to transfer

Question 15

Legal opinion

Answer 15

Requires for all munis, validates, binds, verifies tax exemption

2 types
Unqualified - no restrictions
Qualified - restrictions

Question 16

Muni rule G 38

Answer 16

Consultants paid, licensed, agreement in writing, qtrly reporting

Negotiated offering only

Question 17

Muni confirmations

Answer 17

Must disclose YTM or YTC whichever is lower

Question 18

Official statement

Answer 18

Discloses all relate to info about issuer Aka muni prospectus

Question 19

Analyzing revenue bonds

Answer 19

1. Rates
2. Covenants
3. Flow of funds
   net = maintenance first
   gross = debt service 1st
4. Feasibility

Question 20

Price and coupons determined by:

Answer 20

Brokerage

Loss/gain from premium/discount goes to issuer

Question 21

Ad valorem tax

Answer 21

Based on assessed value of property, largest source of backing for GO bonds

1 mill = .001

Question 22

New issue definitions

Answer 22

Date of sale - day bids submitted to issuer (competitive), day contract signed (negotiated)

Order period - time period syndicate solicits orders

UW period - begins when 1st order submitted to syndicate or securities purchased from issuer, whichever is 1st

Question 23

Taxable equivalent yield

Answer 23

Municipal yield/100% - tax bracket

Question 24

Primary market, 2 types of new issues

Answer 24

1. Negotiated - issuer chooses UW, no competition, used for revenue and IDR bonds
2. Competitive - issuer chooses syndicate through auction, least expensive, used for GO bonds

Question 25

Notice of sale

Answer 25

Announcement of competitive offering, can now submit bids

NIC - net interest cost, most common
TIC - true interest cost, considers inflation

Question 26

Bondbuyer.com

Answer 26

Includes several muni indexes, nearly all of which cover A rated munis with 20yr maturities, the number referenced in the index refers to the quantity of bonds tracked

Question 27

Municipal equivalent yield

Answer 27

Taxable bond yield x (100% - tax bracket)

Question 28

Who enforces MSRB rules

Answer 28

SEC
FDIC
comptroller of currency

NOT THE MSRB

Question 29

Type of muni bond that needs legislative approval

Answer 29

Moral obligation

Question 30

Whites ratings are primarily concerned with

Answer 30

Marketability