About This Chapter
Municipal Securities - Chapter Summary
If you are planning to take a test requiring a thorough knowledge of municipal securities, this chapter offers a great source of review. The lessons provide information about different types of municipal bonds, certificates of participation, and features of municipal securities, such as call features and refunding methods. After working through this chapter, you should be able to:
- Define types of municipal bonds and short-term municipal obligations
- Identify what makes zero coupon bonds unique
- Describe types of municipal securities, including variable rate, auction rate, and taxable securities
- Explain the various characteristics and types of taxable municipal securities
- Express the benefits associated with tax-advantaged plans, such as 529 plans and ABLE accounts
- Tell about types of local government investment pools and how they work
- Recognize the factors that play into the marketability of municipal bonds
The lessons in this chapter are engaging, and help you to gain mastery of the topics. Topics are broken into short lessons, so that those who are studying for tests can break down their preparation. Quizzes are available at the end of the lessons to help you to be sure that you're on the right track.
1. Mutual Fund Securities: Definition & Examples
Mutual funds are an investment vehicle for smaller investors, and provide investment diversity, albeit at a higher fee. This lesson discusses mutual funds generally and different types of funds.
2. Characteristics of Municipal Fund Securities
Municipal fund securities are not the same as traditional municipal securities and include: local government investment pools, 529 educational accounts, and ABLE accounts (for those with disabilities).
3. Common Types of Municipal Bonds: Purpose & Characteristics
Municipal bonds and notes are financial instruments issued by various governments to raise funds that they need to operate. This lesson will discuss the different types of bonds and notes.
4. Special Types of Municipal Bonds: Purpose & Characteristics
This lesson deals with special types of municipal bonds. Learn about special tax, special assessment, moral obligation, advance or pre-refunded, and double-barreled bonds.
5. Zero Coupon Bond: Definition, Formula & Example
Zero coupon bonds are an alternative investment type compared to traditional bonds. In this lesson, we will explore what makes these investments unique and how investors can calculate a purchase price or yield of these bonds.
6. Variable Rate Securities: Definition & Characteristics
In this lesson, you will learn about municipal securities and variable rate securities. You will also learn the three common types of municipal variable rate securities.
7. Auction Rate Securities: Definition & Characteristics
The lesson focuses on auction rate securities (ARS), one of the three types of municipal variable rate securities. You'll learn the characteristics of auction rate securities and their advantages and disadvantages.
8. Taxable Municipal Securities: Definition & Characteristics
Taxable municipal bonds are municipal bonds issued by local municipalities for purposes that do not qualify for federal tax exemption of the interest payments. They still are highly attractive to investors, however. Learn about them in this lesson.
9. Certificates of Participation (COPs): Definition & Characteristics
This lesson deals with certificates of participation (COPs) issued by local governments. Learn how to identify and describe key characteristics of certificates of participation.
10. 529 Prepaid Tuition Plans: Definition & Overview
The 529 Prepaid Tuition Plans offer tax benefits and allow individuals to lock in future college expenses at today's rates. This lesson will explain what the 529 Prepaid Tuition Plans are, how they work, and what they cover.
11. Local Government Investment Pools (LGIPs): Definition & Types
Local government investment pools are a means for local governments to invest excess tax revenues in a fund that will be liquid but provide the government additional income until the money is needed.
12. ABLE Accounts: Definition & Overview
ABLE accounts are accounts set up to provide for the care of a seriously disabled person. An ABLE account allows for contributions for the care of the disabled person to be invested tax free for future needs.
13. Municipal Securities: Call & Put Features
In this lesson you will learn about the basic structure of municipal securities, the concept of call and put features, and the different types of provisions that allow bonds to be called in different ways.
14. Refunding Methods for Municipal Securities
Municipal bonds are issued sometimes with a call provision and a maturity date, at which time they can be paid off. Refunding is a process or method of accruing the funds to pay off the retiring bonds prior to the maturity date.
15. Factors Affecting the Marketability of Municipal Bonds
Municipal bonds are a major source of financing for all government bodies. For that reason, securities professionals need to understand what makes municipal bond issues attractive and marketable to the investment community.
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Other chapters within the Series 7 Exam: Study Guide & Practice course
- Advertising & Public Communication in the Securities Industry
- The New Issues Market
- New Issue Regulations in the Securities Industry
- Brokerage Account Types & Restrictions
- Retirement Plans & Tax-Advantaged Accounts
- Handling Customer Investment Information & Discretionary Accounts
- Obtaining Supervisory Approvals for Investment Accounts
- Analyzing Customer Investment Profiles
- Analyzing Customer Financial Statements
- Understanding Equity Securities
- Tax Treatment of Equity Securities Transactions
- Packaged Investment Products
- Variable Life Insurance & Annuities
- Real Estate Investment Trusts
- Direct Participation Programs
- Understanding Options in Investing
- Debt Securities
- Investing in Corporate Bonds
- Municipal Securities Analysis & Regulations
- Registered Hedge Funds
- Asset-Backed Securities
- U.S. Government Agency Securities
- Investment Product Disclosures
- Customer Updates & Record Retention
- Customer Transactions & Confirmations
- Transactional Delivery Obligations & Settlement Procedures
- Investment Disputes & Customer Complaints
- Addressing Margin Issues