Peter
The interest income received by an investor who owns a Build America Bond is:
a. Taxable at the federal, state, and local levels.
b. Deductible as a credit against the investor’s earned income.
c. Taxable at the state and local levels, but not at the federal level.
d. Taxable at the federal level but not at the state or local level.
a. Taxable at the federal, state, and local levels.
A county issuer intends to issue $1,000,000 in tax-exempt bonds to make its courthouse handicap accessible. Three months before the issue date, it finances $100,000 of construction expense out of its general funds. To reimburse these funds from the new issue, the issuer must do which of the following?
a. Document its intention to repay the expenditures through an official resolution made within 30 days of issuance of the new bond issue
b. Under these circumstances the issuer is not permitted to use new bond proceeds for reimbursement
c. Request prior permission from the IRS to issue reimbursement bonds and then ensure that repayment for the project expenses is made within 1 year of the original expenditure
d. Adopt an official intent to repay the proceeds not later than 60 days after payment of the original expenditures
d. Adopt an official intent to repay the proceeds not later than 60 days after payment of the original expenditures
A Bank loan may be considered an attractive form of financing for a municipality when compared to a bond issue for all of the following except:
a. Greater structuring Flexibility
b. Numerous logistical parameters that are connected to a bank loans as compared to securities offering
c. Lower financing cost
d. Fewer offering document
b. Numerous logistical parameters that are connected to a bank loans as compared to securities offering
The security used by municipalities to finance the cost of capital equipment such as waste hauling or excavating equipment is called a(n):
A) Equipment trust certificate
B) Asset-backed security
C) Certificate of participation
D) Project financing note
C) Certificate of participation
How much of a direct Payment BAB interest will be covered by the government on a 6% coupon rate.
a. 2.1%
b. 5%
c. 3.2 %
d. 6%
a. 2.1%
A tax-exempt lease can be attractive to a municipality because:
a. The types of bonds are issued at lower interest rates than general obligation or revenue bonds.
b. A lease does not require voter approval but is considered debt and is evaluated when measuring the issuer's outstanding debt provision.
c. The issuer is not required to file legal documents with the MSRB.
d. It is not classified as debt for legal purposes and may be used for a wide variety of purposes.
b. A lease does not require voter approval but is considered debt and is evaluated when measuring the issuer's outstanding debt provision.
Public housing programs are funded by which of the following?
a. Municipalities that provide land for public housing developments
b. State public housing programs and agencies
c. Developers that receive special authority from a state government agency to build public housing
d. Public housing districts that are established by county housing authorities
b. State public housing programs and agencies
Municipal fund securities are most similar in structure to
a. Certificate of participation
b. Unit investment trust
c. Open-end investment companies
d. Build America Bonds
c. Open-end investment companies
A municipality borrowing for a short-term period to finance a capital project would issue:
A) Commercial paper
B) Bond anticipation notes
C) Debentures
D) Tax anticipation notes
B) Bond anticipation notes
What two of the following are the two important categories of taxable municipal bonds?
a. Build America Bonds
b. Private purpose bonds or private activity bonds
c. Revenue bonds
d. GO Bonds
a. Build America Bonds
b. Private purpose bonds or private activity bonds
If a municipal lease qualifies as a tax-exempt obligation, the leasing company:
a. Receives income taxable at the state and local levels, but not at the federal level.
b. Receives a tax credit from the IRS equal to 35% of the financing cost of the lease.
c. Can receive tax-exempt interest income.
d. Must pay a credit to the IRS.
c. Can receive tax-exempt interest income.
With regard to bank loans as funding options for municipalities, which of the following statements is TRUE?
a. The market for bank loans and direct loans to municipalities is growing rapidly because of cost effectiveness and ease and flexibility in acquiring the financing
b. municipality must give public notice and offer a public hearing prior to choosing bank financing over the issuance of municipal debt obligations.
c. Bank loan financings are very dissimilar to securities issued by municipalities, and are not subject to securities regulations
d. The terms of all banks loans used for municipal financing must be disclosed to persons who hold outstanding debt of the municipality
a. The market for bank loans and direct loans to municipalities is growing rapidly because of cost effectiveness and ease and flexibility in acquiring the financing
Tax credit bonds are
a. A tax- free municipal bond issued by school districts
b. Taxable municipal bonds that provide issuers with a federal tax credit
c. Taxable municipal bonds that provide investors with a federal tax credit
d. Purchased by investors in higher tax brackets.
c. Taxable municipal bonds that provide investors with a federal tax credit
Which of the following factors would be LEAST useful when analyzing the credit risk of an issuer of general obligation bonds?
A) The schedule of debt service requirements
B) The amount of unfunded pension liabilities
C) The tax base of the issuer
D) The London Interbank Offered Rate (LIBOR)
D) The London Interbank Offered Rate (LIBOR)
What are some examples of projects funded by taxable private –purpose bonds, except?
a. Sports Stadiums
b. Replenishment of municipals pension plan
c. Investor led housing project
d. Hospitals
d. Hospitals
A bank loan may be considered an attractive form of financing for a municipality when compared to a bond issue for all of the following reasons EXCEPT:
a. Greater structuring flexibility.
b. Numerous logistical parameters that are connected to bank loans as compared to securities offerings.
c. Lower financing costs.
d. Fewer offering documents.
b. Numerous logistical parameters that are connected to bank loans as compared to securities offerings.
Municipal bonds with taxable interest payments that are issued to fund a non-essential service are
a. Special assessment bonds
b. Private activity bonds
c. Build America Bonds
d. Double barreled bonds
b. Private activity bonds
If a municipal lease qualifies as a tax -exempt obligation, the leasing company
a. Receives income taxable at the state and local level
b. Receives a tax credit from IRS equal to 35% of the financing cost of the lease
c. Can receive tax exempt interest income
d. Must pay a tax credit to IRS
c. Can receive tax exempt interest income
Earnings that are generated in a Section 529 college savings plan:
A) Must be distributed and taxed to the beneficiary each year
B) Accumulate on a tax-free basis as long as the money stays in the plan
C) Are taxable in the year in which they are earned
D) Are taxable to the donor when distributions are made
B) Accumulate on a tax-free basis as long as the money stays in the plan
What is a double barrel Bond?
a. GO bond that included a second form of backing from a defined revenue source
b. Revenue bond with a TIF
c. TIF with special assessment
d. Special assessment with a Revenue bond
a. GO bond that included a second form of backing from a defined revenue source
Municipal fund securities are most similar in structure to:
a. Certificates of participation.
b. Unit investment trusts.
c. Open-end investment companies (e.g., mutual funds).
d. Build America Bonds.
c. Open-end investment companies (e.g., mutual funds).
The characteristics of ABLE accounts include all of the following except:
a. Contributions made to these accounts are tax deductible
b. Earnings accumulate tax free
c. Distributions from these accounts are tax free
d. Distributions may be used to cover qualified expenses for individuals with disabilities
a. Contributions made to these accounts are tax deductible
A general obligation bond is backed by
a. The full faith and credit issuer
b. A pledge of the state legislator
c. Revenues from all toll road
d. A moral obligation of the issuer
a. The full faith and credit issuer
A municipal bond is issued that contains a non-appropriation clause. This provision would best be described as which of the following?
A) The municipality is not required to make the debt service payments without voter approval
B) The municipality is permitted to terminate the payments it makes to help pay debt service under certain conditions.
C) The municipality receives funds from the state government, which is required to make the debt service payments until the bonds mature.
D) The municipality is permitted to borrow additional funds in order to make debt service payments if not allocated by the state government.
B) The municipality is permitted to terminate the payments it makes to help pay debt service under certain conditions.
Municipal fund securities are most similar in structure to:
a. Open end investment companies (mutual funds)
b. Trust
c. BAB
d. COPS
a. Open end investment companies (mutual funds)