Municipal Analysis and Pricing: Rapid Fire
Chapters in this video
- 0:00 GO bonds versus revenue bonds: tax base versus toll booth
- 1:25 Overlapping debt excludes state debt: exam trap
- 2:17 Gross pledge versus net pledge and coverage ratios
- 3:46 Term bond dollar price versus serial bond yield to maturity
- 4:08 Accrued interest under 30/360 and bonds that trade flat
- 5:11 Premium amortization, OID accretion, and market discount
- 6:03 Taxable equivalent yield: divide, never multiply
- 6:35 Bond buyer indexes and de minimis all-or-nothing cliff
- 7:41 Rapid-fire exam recap
What this video covers
- Why overlapping debt excludes state debt, and how net direct debt excludes self-supporting revenue bonds
- How gross and net pledges differ in flow of funds, and which coverage ratio applies to utility versus standard revenue bonds
- Why term bonds quote in dollar price while serial bonds quote in yield or basis, and what basis means
- How 30/360 day count makes February 30 days for accrued interest, and which three bond types trade flat with no accrued interest
- Why premium amortization is mandatory and nondeductible, while original issue discount accretion is tax-free, and how market discount above the de minimis threshold becomes ordinary income
- How to calculate taxable equivalent yield by dividing, never multiplying, and why yield to call is the lowest relevant yield for premium callable bonds
- What the 11-bond and 20-bond GO indexes measure, why the 11-bond yield is lower, and why U.S. territory bonds are triple tax-exempt in every state
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