Tax Risks Associated with Investing in Municipal Securities
The Primary Market
The Secondary Market
100
Are issuers of municipal securities.
What are state and local governments and entities that they establish?
100
have long been considered second in safety only to U.S. Treasury securities.
What is Municipal bonds?
100
the possibility that a municipal bond issued as a tax-exempt issue may be eventually declared by the Internal Revenue Service to be taxable or the tax rate exemption is reduced.
What are the risks that tax-exempt municipal securities buyers face?
200
is due to their tax treatment at the federal income tax level.
What is the attractiveness of municipal securities?
200
Evaluation of information in four basic categories:
A) the issuer's overall socioeconomic environment.
B) information on the issuer's debt structure and overall debt burden.
C) the issuer's ability and political discipline to maintain sound budgetary policy.
What is the assessment of commercial rating companies?
200
the probability that the municipal bond will most likely decline in value in order to provide a yield comparable to similar taxable bonds.
What is a loss of the tax-exemption feature?
300
to finance capital projects such as the construction of schools, bridges, roads, and airport.
What is the purpose of an issue of municipal securities?
300
Is the impact for a tax-exempt municipal security if the marginal tax rate changes downward.
What is a price decline?
400
One category of investors dominating the municipal securities market.
What are property and casualty insurance companies?
500
includes general obligation debt, appropriation-backed obligations, debt obligations supported by public credit enhancement programs.
What is tax-backed debt?
500
Process through which a state or local government can market its new issue by offering bonds publicly to the investing community or by placing them privately with a small group of investors.
What is primary market for municipal obligations?
500
is a trade considered $25,000 or less in par value for retail investors and for institutions, anything below $100,000 in par value.