Audiobook Study Guide for the Series 52 Exam Now Available

An audiobook version of the Solomon Exam Prep Series 52 Study Guide is now available for the first time for professionals studying for the MSRB Series 52 exam. Continue reading

Solomon Exam Prep has just released the Solomon Series 52 Audiobook, which is a word-for-word reading of the Solomon Exam Prep Series 52 Study Guide, 5th Edition. This is the first Audiobook for the Series 52 from Solomon. With the Series 52 Audiobook, you have greater flexibility in where and how you study for the Series 52 exam.

The MSRB Municipal Securities Representative Qualification Exam (Series 52), qualifies you to work in many capacities related to municipal securities such as selling, underwriting, trading, advising, conducting research, and communicating with public investors. Therefore, to prepare for the Series 52 exam, you must study a wide range of municipal securities knowledge.

Since the Audiobook is a verbatim reading of the 5th edition of the comprehensive Solomon Exam Prep Series 52 Study Guide, it provides another effective way to learn the Series 52 material. The audiobook can be used in tandem with the Solomon Series 52 Study Guide and/or Exam Simulator to create a rich study experience benefiting a variety of learners.

The Benefits of Audiobooks

Jeremy Solomon, Solomon Exam Prep President and Co-founder, points out that for people who find reading challenging because of learning disorders, vision impairments, or some other cause, it can be easier and more enjoyable to learn by listening.

“Besides the advantage of being able to learn on the go, listening to an audiobook version of their Solomon Study Guide can benefit our customers in many ways.”
Jeremy Solomon
Solomon Exam Prep President and Co-founder

Curious about the many benefits of Solomon Audiobooks? Check out our blog post to read more: “Study Tip for Securities Licensing Exams: Learn by Listening.”

Series 52 Study Materials

The 10-hour Solomon Series 52 Audiobook can be purchased individually or as part of a study package, along with the Solomon Series 52 Study Guide and Exam Simulator. The Audiobook is streamable via the Solomon website or free Solomon app for Apple and Android devices. You can also download the tracks to play them offline.

To learn more about Solomon Exam Prep’s Series 52 study materials, including Study Guide, Exam Simulator, and Audiobook, visit the Solomon Series 52 product page.

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Series 52 Solomon Study Guide, 5th Edition, Now Available

The Solomon Series 52 Study Guide, 5th edition, covers everything you need to know to pass the Series 52 Exam and become a Municipal Securities Representative. Continue reading

For those interested in becoming Municipal Securities Representatives, passing the Series 52 exam (plus the co-requisite Securities Industry Essentials, or SIE, exam) is necessary. The MSRB Municipal Securities Representative Qualification Exam, also known as the Series 52, qualifies you to work in many capacities related to municipal securities. These include selling, underwriting, trading, advising, conducting research, and communicating with public investors.

Passing the Series 52 exam requires you to learn about many topics within the three main subject areas of the exam:

    • Municipal Securities
    • Economic Activity, Government Policy, and the Behavior of Interest Rates
    • Securities Laws and Regulations

At 75 questions, the Series 52 might not be the longest securities licensing exam. However, you’ll need to master a lot of knowledge, and Solomon recommends 60 hours of study time. A good study plan is a must. How should you prepare for the Series 52?

Solomon Exam Prep has just released the 5th edition of “The Solomon Exam Prep Guide: Series 52 MSRB Municipal Securities Representative Qualification Examination.” With this updated version of the Study Guide, professionals seeking their Series 52 license can learn the content they need to know to pass the Series 52 exam.

The Series 52 Study Guide is comprehensive and presents exam topics in easy-to-understand language. Charts, graphs, and practice questions throughout the text support learners in understanding and applying key concepts.

“Passing the Series 52 can be challenging because of the vast amount of material it covers. It helps to have study materials written in plain English and guided by research-based teaching methods, like the Solomon system.”
Jeremy Solomon
Solomon Exam Prep President and Co-founder
What changes with this new edition?

The core content of the Series 52 Study Guide remains the same, but the 5th edition of the Series 52 Study Guide includes the following content updates:

    • Expanded and updated coverage of 529 college savings plans
    • Additional information about the order period for new issues
    • Expanded and revised coverage of inflation and interest rates
    • Expansion and update of the process for close-outs
    • Expansion and update of material on limitations on gifts, gratuities, and non-cash compensation
    • A new appendix summarizing the most important and relevant MSRB rules

Updates are also reflected in the Solomon Series 52 Exam Simulator, which complements the Study Guide with over a thousand practice questions.

Series 52 Study Materials

The Series 52 Study Guide is available as a digital subscription with a hardcopy upgrade option. You can purchase the guide individually or in a package with accompanying Series 52 study products. You also benefit from free tools and resources, including Study Schedules in digital and pdf format, which guide you every step of the way.

To learn more about Solomon Exam Prep’s Series 52 study materials, including Study Guide and Exam Simulator, visit the Solomon Series 52 product page.

Also coming soon is the Solomon Series 52 Audiobook! The Audiobook is a word-for-word recording of the Solomon Series 52 Study Guide, giving you greater flexibility in where and how you study for the Series 52 exam.

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How to Pass the MSRB Series 52 Exam

What is the Series 52 exam? Learn what a Series 52 license qualifies you to do, what the exam covers, and how you should prepare for it. Continue reading

What is the Series 52 exam?

If you work for a municipal securities dealer and want to underwrite, trade, and sell municipal securities, then you’ll need to pass the Series 52 exam. You’ll also need to pass the Series 52 exam if you work for a municipal dealer and want to do the following activities:

    • Offer financial advice and consultant services to issuers of municipal securities
    • Conduct research and give investment advice on municipal securities
    • Communicate directly or indirectly with public investors about municipal securities

Also known as the Municipal Securities Representative Qualification Examination, the Series 52 was created by the Municipal Securities Rulemaking Board (MSRB). The MSRB is the principal regulator of the municipal securities market. It establishes rules and professional qualification standards for municipal securities dealers and municipal advisors. Those standards include qualification exams for professionals who work in the municipal securities industry. Passing the Series 52 qualifies you to work as a Municipal Securities Representative.

What are municipal securities?

Governments need to finance their activities by raising money, but they can’t sell stocks like businesses. Instead, governments issue municipal bonds (munis) to fund day-to-day operations and special projects.

Are there any prerequisites for the Series 52?

Yes. To become a Municipal Securities Representative, you must also pass the FINRA Securities Industry Essentials (SIE) exam. The SIE is an entry-level securities qualification exam. Unlike the Series 52, you don’t need to be employed and sponsored by a broker-dealer to take the SIE. It’s “co-requisite” with the Series 52, so you can take the exams in any order, but Solomon recommends you take the SIE first. The SIE is a foundational exam, and the knowledge you learn studying for the SIE will help you when you study for the Series 52.

About the Exam

The Series 52 exam consists of 75 scored and five unscored multiple-choice questions covering the three topic areas of the MSRB Series 52 Content Outline. The five additional unscored questions are ones that the exam committee is trying out. These are unidentified and are distributed randomly throughout the exam.

About the Series 52 exam

Note: Scores are rounded down to the next lowest whole number (e.g. 69.9% would be a final score of 69% – not a passing score for the Series 52 exam).

Topics Covered on the Exam

The MSRB divides the questions on the Series 52 exam into three main areas:

Topics on the Series 52 exam

Within these three main parts, you’ll need to learn about many topics, including:

    • Municipal bonds
    • Municipal fund securities
    • MSRB rules
    • Customer accounts
    • Municipal securities trading
    • Recordkeeping
    • Suitability
    • Settlement and delivery
    • Taxation
    • Federal securities acts
    • The SEC
    • Municipal securities underwriting
    • Marketability
    • Political contribution rules
    • Supervisory obligations
    • Market indicators
    • Economic theory
    • Fiscal and monetary policy
    • Interest rates
    • Business cycles
    • The Federal Reserve Board

The MSRB updates its exam questions regularly to reflect the most current rules and regulations. Solomon recommends that you print out the current version of the MSRB Series 52 Content Outline and use it in conjunction with the Solomon Series 52 Study Guide. The Content Outline is subject to change without notice, so make sure you have the most recent version.

Question Types on the Exam

The Series 52 exam consists of multiple-choice questions, each with four options. You will see these question structures:

Closed Stem Format:

This item type asks a question and gives four possible answers to choose from.

Which of the following is a reason that a municipal government might issue a revenue bond instead of a general obligation bond?

    1. The issuer wishes to pay less interest to the bondholders.
    2. The issuer has met its statutory debt limit and does not want to seek voter approval for the issue.
    3. The issuer wants the bond to have a higher credit rating.
    4. The issuer has the ability to impose taxes.
Incomplete Sentence Format:

This kind of question has an incomplete sentence followed by four possible conclusions.

A make whole call provision is a provision in a bond that allows the issuer to:

    1. Call the bond and pay the bondholder a lump sum payment that includes not just the principal but also the net present value of all future coupon payments that the bondholder would have received if not for the call.
    2. Call the bond and pay the bondholder a lump sum payment that includes the call price of the bond.
    3. Redeem the entire issue early to issue a new set of bonds at a lower interest rate.
    4. Call the bond when the total amount of the interest payments is equivalent to the amount of the principal.
“EXCEPT” Format:

This type requires you to recognize the one choice that is an exception among the four answer choices.

A financial advisor may buy securities from an underwriter for its own or its customers’ accounts if all of the following are true except:

    1. The advisor must not receive any additional underwriting compensation when buying securities for their own account.
    2. The advisor must not receive any additional underwriting compensation when buying securities for customer accounts.
    3. The advisor must disclose the conflict of interest to their customers at or before confirmation of the sale.
    4. The advisor must disclose the conflict of interest to the issuer.
Complex Multiple-Choice (“Roman Numeral”) Format:

For this question type, you see a question followed by two or more statements identified by Roman numerals. The four answer choices represent combinations of these statements. You must select the combination that best answers the question.

_________ risk is a concern for bondholders when interest rates _________.

    1. Interest rate; rise
    2. Call; rise
    3. Interest rate; fall
    4. Call; fall
    1. II and IV
    2. II and III
    3. I and IV
    4. I and III
  1.  

Answers: 1. B   2. A   3. D   4. C

For an even better idea of the possible question types you might encounter on the Series 52 exam, try Solomon Exam Prep’s free Series 52 Sample Quiz.

Taking the Series 52 Exam

The Financial Industry Regulatory Authority (FINRA) administers the Series 52 exam, and you must take it at a Prometric test center. Like all qualifying exams in the securities industry, the Series 52 is closed-book, and you’re not allowed to bring anything into the exam. The test center will provide you with any materials you need to complete the exam. For instance, the test center will likely provide a whiteboard with markers or scratch paper and a pencil, as well as a basic electronic calculator. The inspection and sign-in requirements at test centers are stringent, so plan to arrive at least 30 minutes before your scheduled test appointment.

Test-Taking Tips

When taking the exam, it helps to keep some test-taking strategies in mind. Try not to spend too long on one question—this may cause you to run out of time and not get to other questions you know. If you don’t know the answer to a question, guess at the answer and “flag” it. There’s no penalty for guessing, so it’s beneficial to answer every question.

After you’ve finished all the questions, you can come back to any flagged questions. This strategy allows you to efficiently answer the ones you know. You might also learn something later in the exam that helps you answer an earlier question. Just remember to save enough time to return to the questions you didn’t answer. However, it’s not a good idea to simply skip all of the difficult questions with the plan to answer them later. You should make a serious effort to answer each question before moving on to the next one since your thoughts are often clearer earlier on during the exam.

How to Study for the Series 52 Exam

Follow Solomon Exam Prep’s proven study system:
    • Read and understand. Read the Solomon Study Guide, carefully. Many students read the Study Guide two or three times before taking the exam. To increase your ability to focus while reading, or as an alternative to reading, the Solomon Series 52 Audiobook will be launching soon! The Audiobook is a word-for-word reading of the Study Guide.
    • Answer practice questions in the Exam Simulator. When you finish reading a chapter in the Study Guide, take 4–6 chapter quizzes in the Exam Simulator. Use these quizzes to give yourself practice and to find out what you need to study more. Make sure you read and understand the question rationales. When you’re finished reading the entire Study Guide, review your handwritten notes once more. Finally, start taking full practice exams in the Exam Simulator. Aim to pass at least six full practice exams and try to get your average score to at least 80%. When you reach that point, you’re probably ready to sit for the Series 52 exam.
Use these effective study strategies:
    • Take handwritten notes. As you read the Study Guide, take handwritten notes and review your notes every day for 10–15 minutes. Studies show that taking handwritten notes in your own words and then reviewing them strengthens learning and memory.
    • Make flashcards. Making your own flashcards is another proven method to reinforce memory and strengthen learning.
    • Research. Research anything you don’t understand. Curiosity = learning. Students who take responsibility for their own learning by researching anything they don’t understand get a deeper understanding of the subject matter and are much more likely to pass.
    • Become the teacher. Studies show that explaining what you’re learning greatly increases your understanding of the material. Ask someone in your life to listen and ask questions, or explain it out loud to yourself. Studies show this helps almost as much as explaining to an actual person (see Solomon’s previous blog post to learn more about this strategy!).
Take advantage of Solomon’s supplemental tools and resources:
    • Use all the resources. The Series 52 Resources folder in your Solomon student account has helpful study tools, including documents that summarize important exam concepts. There’s also a detailed study schedule that you can print out – or use the online study schedule and check off tasks as you complete them.
    • Use Ask the Professor. If you have a content-related question, click the Ask the Professor button in your account dashboard and get personalized help from a Solomon professor.
  • Good practices while studying:
    • Take regular breaks. Studies show that if you’re studying for an exam, taking regular walks in a park or natural setting significantly improves scores. Walks in urban areas or among people did not improve test scores.
    • Get enough sleep during the period when you are studying. Sleep consolidates learning into memory, studies show. Be good to yourself while you’re studying for the Series 52: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the MSRB Series 52 Exam! It just takes focus and determination. Solomon Exam Prep is here to support you on your path to becoming a municipal securities representative!

Explore all Solomon Exam Prep Series 52 study materials, including the Study Guide and Exam Simulator.

And join the Solomon email list to find out when the Series 52 Audiobook is released! Just click the button below:

Curious about the Solomon Learning System? Watch the video overview!

Watch the latest Solomon Exam Prep video for a complete look at the Solomon learning system and what it offers students and firms. Continue reading

Solomon Exam Prep has helped thousands of financial professionals pass their FINRA, NASAA, MSRB, and NFA licensing exams. Watch the video for a complete look at the Solomon learning system and what it offers students and firms.

To explore Solomon Exam Prep study materials for 21 different securities licensing exams, including the SIE and the Series 3, 6, 7, 14, 22, 24, 26, 27, 28, 50, 51, 52, 53, 54, 63, 65, 66, 79, 82, and 99, visit the Solomon website.

Simplifying After-Tax and Tax-Equivalent Yields

For many when choosing bonds the most important factor is the tax implications. Knowing the after-tax yield and tax-equivalent yield calculations is critical. Continue reading

Bonds can be nice, reliable investments. Pay some money to an issuing company or municipality, receive interest payments twice a year, and then get all of your original investment back sometime down the road. Sounds like a plan.

But which bonds are best for a specific investor? There are many factors for bond investors to consider when choosing which bond to buy, but for many the most important is the tax implications of investing in one bond instead of another. This concern is most prominent when an investor compares a corporate bond to a municipal bond. For reference, a corporate bond is one issued by a corporation or business, while a municipal bond is one issued by a state, city, or municipal agency.

Comparing the tax implications of these bonds is important because the interest payments that investors receive from municipal bonds are typically not taxed at the federal level. Conversely, interest payments on all corporate bonds are subject to federal taxation. This means that someone in the 32% tax bracket will have to give Uncle Sam 32% of his interest received from a corporate bond, while he will not give up any of his interest received from a municipal bond. Additionally, an investor does not pay state taxes on municipal bond interest if the bond is issued in the state in which the investor lives. Corporate bond interest, on the other hand, is always subject to state tax.

  • interest payments taxed federally
  • interest payments subject to state tax
  • interest payments not federally taxed
  • interest payments not taxed by state if issued in state local to investor

For these reasons, when comparing a corporate bond to a municipal bond, understanding the after-tax yield and the tax-equivalent or corporate-equivalent yield is essential. This is true both for investors and for those who will be taking many of the FINRA, NASAA, and MSRB exams. So let’s look at how to calculate those yields.

After-Tax Yield

First the after-tax yield. The after-tax yield tells you the amount of a corporate bond’s annual interest payment that an investor will take home after accounting for taxes he will be assessed on that interest. Once that amount is known, the investor can compare it to the yield he would receive from a specific municipal bond and see which potential investment would put more money in his pocket. When calculating the after-tax yield, start with the annual interest percentage (a.k.a. coupon percentage) of the corporate bond, which represents the percent of the bond’s par value that an investor receives each year in interest. For instance, a corporate bond that has a $1,000 par value and an interest rate of 8% will pay an investor $80 dollars in annual interest ($1,000 x 0.08 = $80). You then multiply the coupon percentage by 1 minus the taxes an investor will pay on the corporate bond that he will not pay on the municipal bond that he is considering.

This is where it sometimes gets tricky. What taxes will an investor not pay when investing in a municipal bond that he will pay when investing in a corporate bond? Remember that for just about all municipal bonds, investors do not pay federal tax on interest received.

The formula for after tax yield is:

After-tax yield = Corporate Bond Annual Interest Rate x
( 1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)

On the other hand, an investor always pays federal taxes on interest received from a corporate bond. Additionally, an investor does not pay state taxes on interest payments from a municipal bond issued in the state in which the investor lives.

On the other hand, an investor always pays state taxes on interest received from corporate bonds. So if you see an exam question in which you need to calculate the after-tax yield of a corporate bond to compare it the yield on a municipal bond, you will always subtract the investor’s federal income tax rate from 1 in the equation. You will also subtract the investor’s state tax rate from 1 if the municipal bond is issued in the investor’s state of residence.

Seems simple, right? Here’s a question to provide context:

Marilyn is a resident of Kentucky. She is considering a bond issued by XYZ Corporation. The bond comes with a 7% annual interest rate. Marilyn is also interested in purchasing municipal bonds issued in Ohio. If Marilyn has a federal tax rate of 28% and Kentucky’s state tax rate is 4%, what is the after-tax yield on XYZ’s bond?

To answer this question, begin with the interest rate on the XYZ bond, which is 7%. Then subtract from 1 the taxes Marilyn will not pay if she invests in the municipal bond in question. She will not pay federal taxes on the municipal bond interest, so you would subtract 28%, or .28. However, because Marilyn is a resident of Kentucky and the municipal bonds she is considering are issued in Ohio, she will pay state taxes on the bond. That means you would not subtract her state tax rate (0.04) from 1. After subtracting .28 from 1 to get 0.72, you multiply that amount by the 7% coupon payment. Doing so gives you a value of 5.04 (7 x 0.72 = 5.04%). This means that the interest amount she would take home from the XYZ bond would be equivalent to what she would receive from a municipal bond issued in Ohio that has a 5.04% interest payment. If she can get a bond issued in Ohio that has a higher interest payment than 5.04%, she would take home more money in annual interest payments than she would from the XYZ bond.

Tax-Equivalent Yield

The second approach an investor can take to compare how a potential bond investment will be affected by taxation is to calculate the tax-equivalent yield (TEY). This calculation is also known as the corporate-equivalent yield (CEY). The TEY/CEY measures the yield that a corporate bond will have to pay to be equivalent to a given municipal bond after accounting for taxes due. To calculate this yield, you take the annual interest of the given municipal bond and divide it by 1 minus the taxes the investor will not pay if she invests in the municipal bond that she would pay if she invested in a corporate bond.

Here’s the formula for tax-equivalent yield:

Tax-equivalent yield = Municipal Bond Annual Interest Rate /
(1 – Taxes Investor Does Not Pay By Investing in Municipal Bond)

When determining what tax rates to subtract from 1 in the denominator, the same principal as described above applies. That is, the investor will not have to pay federal tax on the municipal bond, so her federal rate is always subtracted from 1. The investor will also not have to pay state tax on the bond if it is issued in the state in which she lives. If that is the case, the investor’s state tax rate should also be subtracted from 1. However, if the investor lives in a different state than the state in which the bond is issued, she will have to pay state taxes on the interest payments. In that case, her state tax rate would not be subtracted from 1.

Here’s another question to provide context.

Franz, a resident of Michigan, has purchased a Michigan municipal bond that pays 4% annual interest. If his federal tax bracket is 30% and the Michigan state tax rate is 4%, what interest rate would he need to receive on a corporate bond to have a comparable rate after accounting for taxes owed?

To answer this question, begin with the interest rate on the Michigan municipal bond, which is 4%. Then subtract from 1 the taxes that Franz will not pay on that bond that he would pay if he invested in a corporate bond. He wouldn’t pay federal taxes on the municipal bond interest, so you would subtract 0.30 from 1. Additionally, since the bond is issued in Michigan and he is a Michigan resident, Franz will not pay state taxes on the bond. So you subtract Michigan’s state tax rate of 4%, or 0.04, from 1 as well. After subtracting 0.30 and 0.04 from 1 to get 0.66, you divide that number into the 4% municipal bond annual interest. Doing so gives a value of 6.06 (4 / 0.66 = 6.06). This means Franz would need to find a corporate bond that pays 6.06% in annual interest to match the amount of interest he will take home annually from the Michigan municipal bond after accounting for taxes.

Many people are confused by the concepts of the after-tax and tax-equivalent yields. But you don’t have to be one of them. Just follow this simple approach and any questions you see on this topic will not be overly taxing.

Mastering these equations will help you succeed in passing the Series 6, Series 7, Series 50, Series 52, Series 65, Series 66, and Series 82.

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Solomon Study Question of the Month for April

This month’s study question from the Solomon Exam Prep Online Exam Simulator question database is now available. Continue reading

Study Question

This month’s study question from the Solomon Online Exam Simulator question database is now available.

*** Comment below or submit your answer to info@solomonexamprep.com to be entered to win a $20 Starbucks gift card.***

This question is relevant to the SIE and the Series 7, 14, 50, 52, and 54.

Question: A Municipal Finance Professional (MFP) hosted a $500 plate fundraiser for a governmental issuer. Does this event trigger a ban on business for two years?

A. Yes, it will trigger a ban because an MFP may not host a fundraiser.

B. Yes, it will trigger a ban because the cost per plate is above the de minimis amount.

C. No, it will not trigger a ban because the MFP did not contribute money, only time and space.

D. No, it will not trigger a ban because the MFP was holding the fundraiser, not the municipal dealer.

Correct Answer: A

Explanation: MFPs are not permitted to solicit funds for municipal issuers or their officials without triggering a two-year ban on business for their firm. Thus, holding fundraisers is not allowed. Municipal dealers are also forbidden from holding fundraisers.


To explore free samples of Solomon Exam Prep’s industry-leading online exam simulators for the SIE, Series 7, Series 14, Series 50, Series 52, Series 54, and other FINRA, MSRB, NASAA, and NFA exams, visit the Solomon website here.

November Study Question of the Month

Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card. Continue reading

Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.

Question

Relevant to the Series 50Series 51, Series 52, and Series 53.

 

 

 

 

 

A municipal finance professional decides to donate his time to a municipal official’s campaign. He donates his time outside of work hours. Which of the following is true?
 
A. This would not be considered a contribution under G-37, and would not need to be disclosed and would not trigger the ban
B. This is considered a contribution that will need to be reported and may trigger the ban
C. This will need to be disclosed by the dealer, but it would not trigger the ban

D. This is considered a contribution that may trigger the ban, but will not need to be reported

Answer: A. An employee of a dealer generally can donate his or her time to a municipal official’s campaign without it being considered a contribution to the official, as long as the employee is volunteering his or her time during non-work hours, or is using previously accrued vacation time or the dealer is not otherwise paying the employee’s salary (e.g., an unpaid leave of absence). Because the volunteering takes place outside of work hours, it would not be considered a contribution and will not trigger the ban or need to be disclosed.

February Study Question of the Month

Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card. Continue reading

Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.

Question

Relevant to the Series 6, Series 7, Series 50, Series 52, and Series 65.

 

 

 

 

 

General obligation bonds

A. are secured bonds

B. are unsecured bonds

C. are typically secured bonds, but are occasionally unsecured bonds

D. are typically unsecured bonds, but are occasionally secured bonds

Answer: B.

General obligations are not funded by a revenue stream associated with a specific project, so they are unsecured. Instead, they are backed by the full faith and credit of the municipality and paid for by taxpayers.