Series 50: Chapter 3 Practice Questions

Chapter 3 Practice Questions

1. 1. Which of the following would you be least interested in looking at to analyze a revenue bond?
2. A. Protective covenants
3. B. Flow of funds
4. C. Net overall debt per capita
5. D. Feasibility study
6. 2. A rate covenant requires an issuer to:
7. A. Maintain a specified interest rate on its debt issues
8. B. Set rates and fees high enough to safely cover operations and debt service
9. C. Set aside a portion of net revenue into an escrow account
10. D. Avoid issuing any new debt with a higher interest rate than the rate on the current issue
11. 3. An additional bonds covenant will appear on a bond issue:
12. I. With an open-end indenture
13. II. With a closed-end indenture
14. III. For a general obligation bond
15. IV. For a revenue bond
16. A. I and III
17. B. I and IV
18. C. II and III
19. D. II and IV
20. 4. Which of the following are you not likely to find in the financial section of the CAFR?
21. A. Statement of activities
22. B. MD&A
23. C. Independent auditors’ report
24. D. Information about financial trends
25. 5. Goodville wants to gather information for the pension plan portion of its CAFR. Which of the following equations best describes how to make calculations using net pension obligations?
26. A. Plan net position – total pension liability = net pension liability
27. B. Plan net position + net pension liability = total pension liability
28. C. Plan net position + total pension liability = net pension liability
29. D. Total pension liability – plan net position = net pension liability
30. 6. Where are you most likely to find a list of protective covenants for a municipal bond?
31. A. Bond resolution
32. B. Flow of funds statement
33. C. Bond indenture
34. D. Feasibility study
35. 7. The flow of funds for municipal reven