FAQ: Which Of The Following Actions Must Be Taken If A Municipality Wishes To Raise Its Debt Limit?

Which of the following are sources of income that can be used for debt service on a municipal revenue bond?

Which of the following are sources of income that can be used for debt service on municipal revenue bonds? operation and maintenance reserve account.

Which of the following statements are true regarding a municipal bond issue that is advance refund?

All of the statements are true regarding advance refunding of a municipal bond issue. In an advance refunding, the issuer floats a new bond issue and uses the proceeds to “retire” outstanding bonds that have not yet matured. These funds are deposited to an escrow account and are used to buy U.S. Government securities.

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Which of the following provide fundamental analytical information about municipal issues?

Which of the following provide fundamental analytical information about municipal issues? Fundamental analysis of municipal bond credit risk is performed by Moody’s; Standard and Poor’s; and by Fitch’s Investors Services.

Which of the following would be used to evaluate a general obligation bond issue?

When analyzing a General Obligation bond, all of the following ratios would be evaluated: debt to assessed valuation ratio. debt per capita ratio. tax collection ratio.

Which security does not earn interest?

Short-term fixed-income securities include Treasury bills. The T-bill matures within one year from issuance and doesn’t pay interest. Instead, investors can buy the security at a lower price than its face value, or a discount. When the bill matures, investors are paid the face value amount.

What is general obligation and revenue bonds?

General obligation, or GO, bonds are backed by the general revenue of the issuing municipality, while revenue bonds are supported by a specific revenue source, such as income from a toll road, hospital, or higher-education system.

What is a variable rate note?

A variable-rate demand note (VRDN) is a long-term municipal bond which is offered to investors through money market funds. The notes allow a municipal government to borrow money for long periods of time while paying short-term interest rates to investors.

Which statement best describes a bond which is trading flat The bond is trading?

The best answer is C. A bond trades flat (without accrued interest) when the issuer has defaulted on the interest payments, or if the issue is an income bond or a zero coupon bond. Therefore, a current bondholder receives no interest on bonds that trade flat.

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Which of the following describes a bank qualified municipal issue?

A “bank qualified” municipal issue is an issue of $10,000,000 or less that has been designated by the issuer as a “bank qualified issue.” To be bank qualified, it must be a public purpose (not private purpose issue).

Who approves an official statement?

(1) Prior to bidding on or purchasing an issue, the underwriter is required to “obtain and review” an official statement that is deemed final by the issuer as of its date, except for the omission of certain information that is not known until the time of the sale.

What is a municipal bond resolution?

Bond Resolution or Ordinance. The document(s) representing action of the issuer authorizing the issuance and sale of municipal bonds. Issuance of the bonds is usually approved in the authorizing resolution or ordinance, and the sale is usually authorized in a separate document called the “sale” or “award” resolution.

What information is available on Muni points?

The most popular DPC DATA information product, MuniPOINTS documents are concise, descriptive summaries of municipal bond issues. They include bullet-pointed text, extracted directly from the official statements, with no analytic content. Indexed by CUSIP, MuniPOINTS fact sheets are quick to access.

Are general obligation bonds tax exempt?

Their interest payments are usually exempt from federal income taxes, and may be exempt from state income taxes if the bond issuer is located in the investor’s home state.

How do you get general obligation bonds?

How to Buy General Obligation Bonds

  1. Contact a broker.
  2. Research the credit rating of the bond.
  3. Find out the interest pay dates of the bond.
  4. Check the maturity date of the bond.
  5. Understand the minimum purchase commitments.
  6. Ask your broker what the mark-up or commission on the bond will be.
  7. Pay for your bonds.
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Are general obligation bonds callable?

Many municipal bonds are callable, which simply means that the issuer can redeem the bonds earlier than the maturity date (i.e. pay back the bonds). In this example, these AAA-rated Georgia State General Obligation bonds pay a coupon of 5% and mature in 2024.

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