Column 1
Transportation Bonds, Special Tax Bonds, and Special Assessment Bonds are all types of ________ bonds.
Revenue Bonds
(True/False)As interest rates rise, the price of existing bonds declines.
True
How will bond prices respond to an increase in interest rates?
They will decrease
What is the term for a contract between the borrower and lender that establishes the issuer’s responsibilities and bondholder’s rights?
Indenture
The par value of a bond can also be referred to as _____ and _________.
Face Value and Principal
What does duration measure?
How a bond’s price responds to small changes in market yields
The length of time it takes to get your initial investment back
What is the elimination of responsibility on the part of the issuer and the elimination of the bondholder's rights is referred to as; occurs when the issuer places cash/assets with an escrow agent.
Defeasance
(True/False) Revenue Bonds are fully backed by the taxing power of the issuer.
False
Only GO Bonds
This provides long-term funding through a lease that doesn't legally constitute a loan, thereby eliminating the need for a public referendum/vote.
Certificate of Participation
Which of the following would be the lowest bond rating?
A. Moody’s Aaa1
B. Moody’s Aaa2
C. S&P AA
D. S&P A+
D. S&P A+
An issuer will most likely pre-fund an outstanding bond when interest rates have:
A. Increased
B. Decreased
C. Remained the same
D. Only after the bond is at least 50% to its original call date
B. Decreased
Issuers will try to lock in a lower rate by pre-funding a bond prior to the call date.
What is the most common remedy available to Bondholders, which can force a municipality to pay the debt before employees/ pensioners or used to enforce a tax increase?
Writ of mandamus
Why would someone be subject to a mandatory call?
If assets used as collateral become undervalued and they do not put up additional assets or funds as collateral.
A person who is legally compelled or required to make payments to service the debt of an issuer of a municipal security.
Obligated Person
This type of college savings plan allows for tax-free withdrawals when funds are used towards education?
529 Plans
This type of borrower is legally obligated to make payments to service the debt of an issuer.
Conduit Borrower
When an issuer wants to generate debt service savings and an advanced refunding is otherwise not allowed under Treasury rules.
Synthetic refunding
In a synthetic refunding, the issuer agrees to certain future actions in exchange for a payment from a counterparty. The issuer then uses the payment to satisfy the debt service on the outstanding bonds.
What bonds are issued by state or local housing finance agencies in an effort to help fund single-family or multi-family housing and are normally for low- or moderate-income families?
Housing Revenue Bonds
Yield to ____ measures the return on a bond until its call date rather than the maturity date.
Call
When money flows from the refunded issue to the refunding issue it is referred to as ___________________.
Crossover Refunding
Local general obligation bonds are backed by what type of tax?
Property Tax
Assuming a net revenue pledge bond, what is the first priority according to the flow of funds?
Operating and Maintenance Fund
Municipal Notes provide ______ options to help Municipalities manage their cash flows.
Short Term
Interest paid on bonds issued by U.S. territories or possessions is ___________________.
triple-tax-exempt.
What are some factors analysts look at when evaluating the risk of default on GO bonds?