Chapter 1 Practice Questions
1. The owner of a house with a market value of $450,000 and an assessed value of $300,000, and with an ad valorem tax of 4 mills would pay a property tax of:
A. $120
B. $1,200
C. $12,000
D. $120,000
2. All of the following bonds would be backed by ad valorem taxes except:
A. A bond issued by the Philadelphia Water Department
B. A bond issued by Howard County
C. A bond issued by Western School District
D. A bond issued by the City of Cincinnati
3. Which of the following are ultimately backed by the full faith and credit of the issuer?
I. Moral obligation bonds
II. General obligation bonds
III. Double-barreled bonds
IV. Lease revenue bonds
A. I and II
B. III and IV
C. II and III
D. II and IV
4. Local government investment pools may have as participants:
A. Commercial institutional investors
B. Government entities
C. Individual investors
D. Government employees
5. All of the following are characteristic of a capital appreciation bond except:
A. The discount is calculated using compound interest.
B. It converts from a zero coupon bond to a coupon bond at a specified time.
C. The initial purchase price is counted against the issuer’s statutory debt limit.
D. It is typically callable.
6. The town of Sharpsville plans to issue a long-term bond for a capital project, but is still in the process of working out the final costs. Since they need to begin work as soon as possible, which of the following would Sharpsville most likely issue?
A. Construction loan notes
B. Bond anticipation notes
C. Grant anticipation notes
D. Tax anticipation notes
7. Tax-exempt commercial paper is usually backed by:
A. The full faith and credit of the issuer
B. Property taxes
C. Revenue
D. A line of credit with a bank
8. All of the following may participate in a local government investment pool except:
A.