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Series 7 > Munis > Flashcards

Flashcards in Munis Deck (30):
1

Muni complaints

Settled through arbitration, kept on file for 6 yrs

2

Analyzing GO bonds

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

3

Other types of munis

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

4

Muni quotes

Must be fair and reasonable

5

Amounts and maturities determined by:

Issuer

6

Revenue bonds

No voter approval, no debt ceiling

7

Debt service coverage ratio

Net OR gross revenues/principal & interest

8

Muni notes, 7 types

Short term, one yr or less
Most of these are anticipation - tax, revenue, combo, grant, bond, construction, and principal note, commercial note

9

Muni G 37 rule

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

Negotiated offering only

10

GO bonds

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

11

Muni allocation of orders

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

12

Secondary muni market

Liquidity risk, not usually sold short

Retail
Interdealer
Institutional
Brokers broker

13

IDR

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

14

MSRB

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

15

Legal opinion

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

2 types
Unqualified - no restrictions
Qualified - restrictions

16

Muni rule G 38

Consultants paid, licensed, agreement in writing, qtrly reporting

Negotiated offering only

17

Muni confirmations

Must disclose YTM or YTC whichever is lower

18

Official statement

Discloses all relate to info about issuer Aka muni prospectus

19

Analyzing revenue bonds

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

20

Price and coupons determined by:

Brokerage

Loss/gain from premium/discount goes to issuer

21

Ad valorem tax

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

1 mill = .001

22

New issue definitions

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

23

Taxable equivalent yield

Municipal yield/100% - tax bracket

24

Primary market, 2 types of new issues

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

25

Notice of sale

Announcement of competitive offering, can now submit bids

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

26

Bondbuyer.com

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

27

Municipal equivalent yield

Taxable bond yield x (100% - tax bracket)

28

Who enforces MSRB rules

SEC
FDIC
comptroller of currency

NOT THE MSRB

29

Type of muni bond that needs legislative approval

Moral obligation

30

Whites ratings are primarily concerned with

Marketability