Chapter 4 Practice Questions
1. A bond has a face value of $1,000. The manager’s fee is 1/10 of a bond point. What is the dollar value of the manager’s fee?
A. $0.10
B. $1.00
C. $10.00
D. $100.00
2. The spread in a municipal underwriting is equal to:
A. The manager’s fee plus the total takedown
B. The manager’s fee plus the additional takedown
C. The additional takedown plus the concession fee
D. The total takedown plus the additional takedown
3. An issue is allotted among five underwriters, with each underwriter receiving a fifth of the issue. Members A and B sell their full allotments, Members C and D each sell half their allotments, and Member E sells three-quarters of its allotment. If the syndicate uses an Eastern account, what is Member C’s remaining liability?
A. 5% of the issue
B. 10% of the issue
C. 20% of the issue
D. 40% of the issue
4. Which of the following would be required in the preliminary official statement for a municipal GO bond?
A. Maturity structure
B. Offering price
C. Interest rates
D. Selling compensation
5. Underwriters of municipal bonds must give prospective customers a preliminary official statement:
A. At or before the time of any sale
B. At least one business day prior to any sale
C. No later than one business day after any sale
D. Within one business day of any customer request
6. The order period for a municipal bond offering may last:
A. From 1 hour to 24 hours
B. From 1 hour to 5 days
C. From 1 day to 5 days
D. From 1 day to 10 days
7. Underwriters of municipal bonds must provide the MSRB with copies of any amendments to the official statement:
A. On an ongoing basis
B. Until the settlement of the underwriting
C. Until the 25th day after the settlement of the underwriting
D. Until the 90th day after the settlement of the underwriting
8. Arrange the following order types from highest priority to lowest priority:
I.