Bubba is concerned about the liquidity of a possible municipal bond purchase. He is therefore probably most interested in the rating supplied by which of the following?
Answer(s): C
White’s. White’s ratings are based on trading market data as opposed to the financial data of the issue, which is used by Moody’s as well as S&P.
Which of the following forms of underwriting is least likely for an offering of municipal bonds?
Answer(s): D
best efforts. A best efforts deal least likely for a municipal securities offering. It is most often associated with small corporate stock or limited partnership offerings. Municipal securities are usually competitive bid or negotiated. Both of these types are firm commitment.
Big Guns Municipal Bond Dealer Corporation buys 100M of 7% 20-year GO bonds at par. The bonds are marked up and immediately re-offered for sale.Which of the following re-offering prices would probably be deemed excessive?
5.00% net. The other quotes indicate moderate markups over cost. A quote of 5% net indicates a large markup and a price not “reasonably related to the market”. The dollar price would be about $125, a 25% markup over the dealer’s cost.
Municipal bonds would be least attractive as an investment for which of the following?
Answer(s): B
a pension fund. Since the pension fund does not pay income tax, the tax benefits of the municipal bonds are not realized.
If a municipality has funds available to make a partial call of an issue of outstanding serial bonds, which bonds should be called first?
the longest maturity. These bonds are called first because the municipality will save the interest costs for the longest period of time.
Post your Comments and Discuss FINRA SERIES 7 exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the SERIES 7 content, but please register or login to continue.