Peter
In terms of price discovery, which of the following items is unlikely to play a role?
A. Maturity
B. Call features
C. Insurance
D. Coupon
C. Insurance
Who defines the eligibility criteria for retail orders?
A. The SEC
B. MSRB
C. Dodd-Frank
D. Issuer
D. Issuer
The Notice of Sale would not include:
A. the amount of any good-faith deposit.
B. the type of issue.
C. the maturity schedule.
D. the bond rating.
D. the bond rating.
A copy of the official statement is required to be delivered to the customer by:
A. the end of the marketing period.
B. the date on which the bond transaction is announced.
C. the settlement date of the transaction.
D. the end of the quiet period.
C. the settlement date of the transaction.
In order to avoid qualification as a private activity bond issue, the percentage of bond proceeds used for private business use cannot exceed
A. 5%
B. 10%
C. 15%
D. 20%
B. 10%
Which of the following items will not be found in the official notice of sale?
A. Bond rating
B. Time of sale of issue
C. Basis of award of issue
D. Maturity schedule
A. Bond rating
Which of the following statements best describes the Bond Buyer’s Placement ratio?
A. The percentage of new municipal bonds that were sold compared to those that were originally available for sale
B. The ratio of trades completed by brokers compared to all secondary market transactions
C. The percentage of new municipal securities that traded in the secondary market
D. The percentage of new municipal issues compared to issues already trading the secondary market
A. The percentage of new municipal bonds that were sold compared to those that were originally available for sale
A municipal bond that matures in 10 years is purchased in the secondary market at 95. At maturity, the gain is:
A. Subject to capital gains taxes
B. Reported as ordinary income
C. Ignored
D. Tax exempt interest income
A. Subject to capital gains taxes
In a competitive offering of municipal securities, the issuer's right to reject any and all bids is included in the:
A. Syndicate Letter
B. Legal opinion
C. Official Statement
D. Notice of Sale
D. Notice of Sale
Which two of the following statements are TRUE regarding the interest on private activity bonds?
I. It is usually higher than comparable municipal bonds
II. It is usually lower than comparable municipal bonds
III. It is subject to alternative minimum tax
IV. It does not qualify for exemption from taxation at the state level for state residents
A. I and IV
B. I and III
C. II and IV
D. II and III
B. I and III
The determination of whether a bond was issued as an original issue discount bond is made by
A. Congress
B. The SEC
C. The IRS
D. The MSRB
B. The SEC
Which of the following does the IRS not consider a qualified purpose as it relate to the tax-exemption of private activity bonds?
A. Veteran housing
B. Low income housing
C. Water treatment facility
D. Issuance costs
D. Issuance costs
Which of the following underwritings is considered to be LEAST flexible?
A. Competitive bid
B. Negotiated underwriting
C. Best efforts
D. Private placement
A. Competitive bid
Which of the following statements regarding the taxation of municipal bonds is correct?
A. Interest on qualified public purpose bonds is not subject to AMT calculation
B. Interest on advance refunding issues is federally tax exempt if the proceeds are fully spent within 3 years of the issue date
C. Capital gains on the sale of municipal bonds are always taxable
D. Interest on general obligation bonds is always tax exempt at the federal and state levels
C. Capital gains on the sale of municipal bonds are always taxable
Which two of the following are true about a bank-qualified bond?
I. They pay a lower coupon than a non-bank-qualified bond
II. They pay a higher coupon than a non-bank-qualified bond
III. They are taxable securities
IV. They are non-taxable securities
A. II and III
B. I and III
C. II and IV
D. I and IV
D. I and IV
Bonds which are placed in the syndicate account and then distributed to syndicate members according to their participation are
A. Presale orders
B. Group orders
C. Designated orders
D. Member orders
B. Group orders
Bennet savgins bank is considering the purchase of some public purpose municipal bonds that are eligible for an interest deduction for the bank. These bonds are:
A. SLGS
B. Bank qualified Bonds
C. Moral obligation Bonds
D. Build America Bonds
B. Bank qualified Bonds
At the final pricing meeting on a competitive municipal issue, all of the following are typical EXCEPT:
A. A syndicate member may drop out
B. The scale is adjusted
C. The order period is established
D. The Notice of Sale is read
D. The Notice of Sale is read
A municipal bond that was issued at par is purchased at $900 with 20 years to maturity. It is sold 5 years later at $980. Assume accretion of $25 based on the straight-line method. This transaction would result in:
A. A capital gain only
B. No gain or loss
C. Ordinary income only
D. A capital gain and ordinary income
D. A capital gain and ordinary income
An issuer has published an Official Notice of Sale to announce that it will accept sealed bids for an upcoming new municipal issue. Which two of the following statements are TRUE?
I. This is a negotiated offering
II. This is a competitive offering
III. The award will be made to the bid that offers the highest net interest cost
IV. The award will be made to the bid that offers the lowest net interest cost.
A. II and IV
B. I and IV
C. I and III
D. II and III
A. II and IV
Which of the following is not a method used to compute interest expense to an issuer for a new issue?
A. Canadian method
B. NIC
C. DCF
D. OATIC
C. DCF
All of the following statements about the MSRB EMMA system are true except:
A. EMMA is an online repository that provides free information to public investors
B. EMMA includes information on municipal bonds, short term securities like municipal notes
C. EMMA includes information about municipal securities firms and representatives, including any regulatory disclosure events
D. EMMA includes real time trade prices for nearly all purchases and sales of municipal securities
C. EMMA includes information about municipal securities firms and representatives, including any regulatory disclosure events
An investor purchases a municipal bond in the secondary market at 106 and holds it until its maturity in 10 years. For tax purposes, the premium:
A. Increases the investors cost basis
B. Must be amortized each year
C. Is tax deductible on an annualized basis until maturity
D. Must be accreted each year
B. Must be amortized each year
All of the following statements about taxation of secondary market discounts are true EXCEPT:
A. The taxation of OIDs and secondary market discounts is the same
B. Market discounts may be subject to a di minimis rule and entitled to more favorable tax treatment.
C. Gains on secondary market discounts are taxed as ordinary income
D. The same calculation is used to determine the di minimis amount for OIDs and secondary discounts
A. The taxation of OIDs and secondary market discounts is the same
An investor purchases a municipal bond at a premium in the secondary market. Which two of the following statements regarding tax consequences to the investor are TRUE?
I. The investor must accrete the premium each year
II. the investor must amortize the premium each year
III. A certain portion of the premium is tax deductible each year the bond is held
IV. If held to maturity, the investor will have neither gain nor loss to report
A. II and IV
B. II and III
C. I and III
D. I and IV
A. II and IV