#1
Which entity issues municipal bonds?
Local government
ExplanationIssued by local governments to fund projects.
#2
What is the primary purpose of municipal bonds?
To fund local government projects
ExplanationPrimary purpose is financing local projects.
#3
Which of the following is NOT a type of municipal bond?
Corporate bond
ExplanationCorporate bonds are not municipal bonds.
#4
What is the typical tax treatment of municipal bond interest?
Tax-exempt
ExplanationInterest is usually not taxed.
#5
Which of the following factors can affect the credit rating of a municipal bond?
All of the above
ExplanationVarious factors influence credit ratings.
#6
What is the primary source of repayment for general obligation bonds?
Taxes levied on the issuer's residents
ExplanationRepaid through taxes on residents.
#7
What does the yield on a municipal bond represent?
The total return to the bondholder
ExplanationYield reflects total returns.
#8
What is the typical credit rating range for municipal bonds?
AAA to BBB
ExplanationCredit ratings range from AAA to BBB.
#9
What is a 'revenue bond' in the municipal bond market?
A bond backed by specific revenue-generating projects
ExplanationBacked by revenue from specific projects.
#10
What is the purpose of a bond insurance policy in the municipal bond market?
To protect against default risk
ExplanationInsures against default risk.
#11
What is a 'callable bond' in the context of municipal bonds?
A bond that can be redeemed by the issuer before maturity
ExplanationIssuer can redeem before maturity.
#12
What is a 'serial bond' in the municipal bond market?
A bond that matures in multiple installments
ExplanationMatures in multiple installments.
#13
What is the 'credit spread' in the context of municipal bonds?
The difference between the yield on a municipal bond and the yield on a U.S. Treasury bond
ExplanationDifference between municipal and Treasury bond yields.