Chapter 8

Municipal Bonds: Local Government Securities

IN THIS CHAPTER

Bullet Understanding municipal bond basics

Bullet Comparing general obligation bonds to revenue bonds

Bullet Reviewing other types of municipal bonds

Bullet Recognizing sources of municipal bond information

Municipal bonds are securities that state governments, local governments, or U.S. territories issue. The municipality uses the money it borrows from investors to fund and support projects, such as roads, sewer systems, hospitals, and so on.

Even though you’re most likely going to spend a majority of your time selling equity securities (stocks), for some unknown reason, the SIE and some of the co-requisite exams such as the Series 7, test heavily on municipal securities. If you’ve flipped ahead, you may have noticed that this chapter isn’t one of the biggest in the book. Why is that? Well, I cover a lot of the bond basics, such as par value, maturity, types of maturities (term, serial, and balloon), and so on, in Chapter 7. Also, you can find some of the underwriting information in Chapter 5.

In this chapter, I cover the SIE exam topics ...

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