Municipal Bonds & Structures
This type of bond has no periodic interest payments and accretes toward par.
A. Premium bond
B. OID bond
C. VRDO
D. Term bond
What is an OID (Original Issue Discount) bond?
This type of municipal underwriting involves public bidding.
What is competitive underwriting?
This term describes a dealer stating it does not recognize a reported trade.
What is a DK (“don’t know”) notice?
This MSRB rule requires dealers to treat customers fairly and not engage in deceptive practices.
What is Rule G-17?
This is the formula for tax-equivalent yield (TEY).
What is: Tax-free Yield ÷ (1 – Tax Rate)?
This yield must ALWAYS be disclosed on confirmations for callable premium munis.
(Hint: The Worst That Can Happen)
What is yield-to-worst?
Which order type has highest priority?
A. Group net
B. Designated
C. Member
D. Presale
What are presale orders?
Which rule governs inter-dealer trade comparison?
A. G-12
B. G-26
C. G-34
D. G-15
What is Rule G-12?
Which rule mandates best execution?
A. G-30
B. G-17
C. G-18
D. G-23
What is Rule G-18?
A steep yield curve signals:
A. Recession
B. Strong growth ahead
C. Fed tightening
D. High unemployment
What is strong future growth?
Which municipal structure resets rates frequently AND includes a put feature?
A. ARS
B. Variable Rate Demand Obligation (VRDO)
C. Zero-coupon muni
D. TIF bond
What is a Variable Rate Demand Obligation (VRDO)?
This is the “sales credit” portion a dealer earns from the sale of a new issue muni.
What is the takedown?
This rule controls customer account transfers and validations.
What is Rule G-26?
This rule governs confirmations and requires disclosure of principal vs. agency capacity.
What is Rule G-15?
This investment protects purchasing power from rising inflation.
What are TIPS?
This relationship describes how yields line up on a discount bond.
What is: YTC > YTM > CY > NY?
Which rule governs syndicate practices?
A. G-11
B. G-15
C. G-30
D. G-34
What is Rule G-11?
This recordkeeping rule describes WHAT records must be kept.
What is Rule G-8?
This rule governs fair and reasonable prices and markups.
What is Rule G-30?
An Investor in 37% bracket benefits MOST from:
A. Corporate bonds
B. AMT bonds
C. Non-AMT munis
D. Treasuries
What are non-AMT muni bonds?
This bond type is secured by property taxes and requires voter approval in many states.
What is a GO (General Obligation) bond?
This document outlines syndicate liability, expenses, and priority of orders.
What is the Agreement Among Underwriters (AAU)?
Which rule dictates HOW LONG muni records are retained?
A. G-8
B. G-9
C. G-12
D. G-21
What is Rule G-9?
Which rule covers political contributions?
A. G-23
B. G-37
C. G-20
D. G-42
What is Rule G-37?
This action by the Federal Reserve decreases money supply and raises interest rates.
What is tightening monetary policy?
This muni structure refinances outstanding debt using proceeds invested in SLGS or Treasuries.
What is an advance refunding?
This rule requires the managing underwriter to obtain CUSIPs.
What is Rule G-34
These documents must be retained for the life of the firm.
What are organizational documents / partnership agreements?
This rule prohibits a financial advisor from underwriting the same issue without proper waiver.
What is Rule G-23?
This yield curve shape is MOST associated with an upcoming recession.
What is an inverted yield curve?
This type of revenue bond has debt service tied to a pledge of sales tax or income tax.
What is a special tax bond?
Which rule governs OS delivery to EMMA?
A. G-32
B. G-21
C. G-17
D. G-23
What is Rule G-32?
This must occur when a delivery is made without proper legal transfer documents.
What is a reclamation?
Which rule governs municipal advisor conduct?
A. G-42
B. G-21
C. G-34
D. G-8
What is Rule G-42?
Which investor should avoid Auction Rate Securities (ARS)?
A. Long-term investors
B. Investors seeking liquidity
C. High-tax-bracket investors
D. Institutional investors
Who are short-term liquidity-driven investors?
Using 30/360, how many days are between March 1 and May 1?
A. 61
B. 62
C. 60
D. 59
What is 60 days?
This order type specifies which syndicate members receive the sales credit.What are designated orders?
What are designated orders?
Inter-dealer muni settlement occurs:
A. T+2
B. T+1
C. Same day
D. T+3
What is T+1?
This rule regulates advertising, including preliminary official statements used as ads.
What is Rule G-21?
This suitability principle requires understanding a client’s financial profile before recommending munis.
What is MSRB Rule G-19 (suitability)?
This is the formula for calculating accretion for an OID muni.
What is: (Par – Purchase Price) ÷ Years to Maturity?
This is the deadline for closing a syndicate account after an offering is complete.
What is 30 calendar days?
All unmatured coupons must accompany delivery of this type of bond.
What are bearer bonds?
This rule requires dealers to participate in periodic regulatory exams.
What is Rule G-16?
This bond type performs BEST during deflation.
What are long-term fixed-rate bonds?
Which metric measures revenue bond strength?
A. PE Ratio
B. Liquidity coverage
C. Debt service coverage ratio
D. Market cap
What is the debt service coverage ratio?
Who sets the reoffering scale in a negotiated underwriting?
A. Issuer
B. Bond counsel
C. Book-running manager
D. Senior advisor
Who is the book-running manager?
This is required when a dealer holds customer securities.
What is segregation and safekeeping?
Rule limiting gifts to $100?
A. G-20
B. G-37
C. G-23
D. G-15
What is Rule G-20?
High debt service coverage ratio indicates:
A. Weak credit
B. Strong credit
C. High default risk
D. Poor liquidity
What is Strong credit?