Order Municipal Bonds Discussion Questions

Order Municipal Bonds Discussion Questions
Order Municipal Bonds Discussion Questions
(ior) An investor purchased five municipal bonds at 105 per bond; the bonds
have a maturity of 20 years. If the investor sells the bonds at 99 after
holding them for 10 years, what is the loss for tax purposes?
(A) $25 per bond 1050 – lobo
(B) $35 per bond ag (C) $50 per bond Ip Y,
(D) $60 per bond yoo ~ (240 ¥ \0) = Wie) as,
(o 24 Ore ()-
402. An investor purchases a 5 percent ape icna Cee he Jina
regular way trade. The bond pays interest on January 1 and July 1. For how
many days of accrued interest would the buyer pay the seller?
(A) 160 days
(B) 161 days
(C) 162 days
(D) 164 days
103. An investor purchases a municipal bond with a remaining maturity of
10 years at 105. The investor holds the bond for six years and sells the bond for 103. What is the capital gain or loss?
a (A) $20 loss
(B) $20 gain ya
) $10 loss Looe
$10 gain a W
Municipal Bonds « 27
(104. ) What are the tax consequences for an investor who purchased a new
municipal bond at 95 with a maturity of 10 years and sold the bond at 97.5 after 5 years?
(A) $25 loss
(B) $25 gain
(C) $50 loss
(D) No loss or gain
Order Municipal Bonds Discussion Questions
The credit rating of an industrial development revenue bond is based on
an analysis of the creditworthiness of the
(A) issuer
(BD lessee
(C) underwriter
(D) bond attorney
A double-barreled municipal bond is
(A) a municipal bond backed by the federal government
(B) acorporate bond backed by the federal government
(C) a bond exempt from federal and state taxes
(D) a bond backed by the full faith and credit of the issuing municipality
if there are insufficient revenues from the project
The source of debt service payments on general obligation bonds issued
by a school district is most likely to come from
(A) excise taxes
(B) income taxes
real estate taxes
(D) sales taxes
Under MSRB rules, municipal securities dealers
I. cannot give customers gifts valued at more than $100 per year
II. can pay legitimate business expenses .
III. enforce all rules
IV. All of the above
(A) Land II
(B) land III
(C) ILand III
(D) IV only
McGraw-Hill’s 500 Series 7 Exam Questions to Know by Test Day
When a municipality issues new bonds through a competitive offering,
what should the official notice of sale published by the municipality
I. The bidding details of the offering
II. The allotment for each syndicate member
III. The amount of the good faith deposit
IV. The re-offering yield
(A) land II
(B) [and III
(C) ILandIV
(D) Ill and IV
Which of the following best describes what a municipal bond broker’s
broker does?
I. Trades securities from inventory
II. Makes a market in securities
III. Specializes in trading securities with banks and municipal brokers
IV. Assists municipal dealers in selling their unsold portions of a
municipal bond issue
(A) I, IL, Il, and IV
(B) II, IH, and IV (© Il and IV
(D) I and II
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