CPFO Debt Management Practice Exam

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• When considering the appropriate amount of variable rate debt, which risk factors should be evaluated?
• What does GFOA recommend regarding the inclusion of underwriter disclaimer language in official statements?
• Which system is required for electronic submission of annual continuing disclosure information as of July 1, 2009?
• What is a takedown also known as?
• What is the spending exception to rebates in the 6-month spending period?
• How do underwriters assess market conditions for new bond issues?
• What is the primary goal when analyzing different methods of debt sale?
• How many material events are identified as required disclosures for municipal securities?
• Which of the following is NOT a key factor in evaluating the need for a credit rating?
• What type of information should issuers provide about governance factors?
• How long does a government have to complete its audited annual financial information?
• What element is critical for the ongoing management of derivatives in public finance?
• Which of the following is typically included in an underwriter's expenses?
• What aspect does NOT influence the method of sale according to GFOA recommendations?
• What does SEC Rule 15c2-12 require underwriters to do regarding municipal securities?
• A municipal advisor is required to disclose conflicts of interest according to which MSRB rule?
• The GFOA recommends that state and local governments balance what aspects in bond issuance?
• What governance factors does GFOA recommend issuers to identify?
• Which of the following is not considered a derivative product?
• Which roles are commonly involved in a bond transaction?
• Why do issuers enter into Continuing Disclosure Agreements (CDAs)?
• What is a potential consequence of structuring POBs poorly?
• What does the 'full faith and credit' of a government ensure in terms of bonds?
• In comparison to similar non-callable securities, callable securities have:
• What does the selling group do during a bond sale?
• Bond calls refer to which financial action in municipal securities?
• What specific information should be included in the offering document (POS)?
• When evaluating the sale or securitization of tax liens, governments should ensure they:
• What does bond yield include?
• When evaluating debt structure, what costs should be considered?
• Which of the following would typically influence an entity's decision on its debt policy?
• What should spend-down estimates for capital projects be periodically compared against?
• For the 5% private activity bond criterion, loans must be:
• What should the offering document (POS) convey about the issuer's authority?
• What are the two main criteria to qualify as private activity bonds?
• Which of the following criteria should be established for determining when to execute a refunding?
• Who is typically part of the underwriting team in a bond issuance?
• When must Form 8038-G be filed?
• What is the legal limit on the amount of bonds outstanding typically expressed as?
• What is the primary purpose of the disclosure procedures that issuers should develop?
• What do underwriter co-managers typically do?
• Which components are included in the underwriter's discount?
• How do bank loans typically compare to publicly offered bond issues?
• What is the main purpose of Certificates of Participation?
• Which expense is typically NOT included in bond issue costs?
• What factor does not need to be considered when using variable rate debt instruments according to GFOA?
• Which event must be disclosed by issuers under SEC rules?
• What is the fiduciary duty of a municipal advisor towards an issuer?
• What type of risk does an underwriter face in a competitive sale?
• How many credit ratings does GFOA recommend issuers obtain?
• What is detailed in the body portion of the offering document (POS)?
• Why are audit reports and financial statements significant in relation to offering statements?
• Which of the following is a typical responsibility of the revenue bond?
• What factor determines if an entity can enter into a bank loan?
• Which team member is deemed unnecessary on a bond transaction according to GFOA's recommendations?
• What is a key feature of revenue bonds in terms of risk?
• In a negotiated sale, which of the following expenses does GFOA recommend not be included in the underwriter's fee?
• What is one of the key recommendations related to debt service payment procedures?
• Use of variable rate debt for financing has the following features except:
• Which type of bond structure allows for multiple maturities over time?
• Why are cash flow analyses important in the bond process?
• What are conduit bonds primarily used for?
• What expenses are typically considered underwriter's expenses?
• Debt management policies assist in adherence to what type of requirements?
• According to MSRB Rule G-23, what restriction is placed on firms regarding municipal advisory services?
• What type of information does MSRB Rule G-10 ensure is communicated to clients?
• Under what conditions is a bond classified as a private activity bond (PAB)?
• Which federal compliance area is important for debt management policies?
• What is the preferred method for determining the interest cost of a bond issue?
• What is one purpose of refunding bonds?
• What should governments assess regarding the impact of tax lien sales?
• GFOA recommends that governments have an Investment Policy that considers:
• According to the GFOA, issuers should have what kind of input in the engagement of underwriter's counsel?
• What common information should a Municipal Advisor’s RFP request from previous clients?
• What does the Municipal Securities Rulemaking Board Rule G-37 prohibit?
• For what reason would a government most likely undertake a refunding?
• How long does GFOA recommend governments wait before indicating on EMMA that they will provide information?
• Federal arbitrage regulations are designed to achieve all of the following except:
• What should the offering document (POS) include regarding credit ratings?
• Which of the following federal laws relate to investment of bond proceeds?
• Which analyses can help determine if refunding bonds is beneficial?
• Which type of costs are incurred by issuers during the debt issuance process?
• What is the role of a Municipal Advisor in a competitive sale?
• What potential issue exists if an issuer designates a firm to serve as underwriter's counsel?
• What does arbitrage allow an issuer to do?
• What type of bond issuance involves establishing an irrevocable escrow account?
• What does GFOA suggest should be included in final official statements?
• What are some exceptions to rebate?
• What is the defining characteristic of a current refunding?
• What type of financial data is critical in the POS for larger or frequent issuers?
• What types of investments are commonly used for tax-exempt refunding bond escrow accounts?
• What does the municipal advisor owe to the issuer according to the Dodd-Frank Act?
• What type of information is found in the financial information portion of the POS?
• What does negative arbitrage indicate?
• Municipal advisors are required to register with which organizations?
• When must debt service payments be made for conduit bonds?
• What is the primary concern of managing a debt portfolio?
• Under MSRB rule G-23, an issuer's MA is prohibited from resigning to serve as what?
• Which of the following is a requirement for the 12-month spending exception?
• According to MSRB Rule G-17, what is one obligation of underwriters?
• Which is not a component of the spread as compensation to the underwriter in a negotiated bond issue?
• Which of the following risks is NOT included in the evaluation for variable rate debt?
• What is the minimum amount of days governments should be alerted by a trustee/paying agent when a bond payment needs to occur?
• Revenue bonds are issued primarily for what purpose?
• For general obligation bonds, what is typically required from voters?
• Do governments need to monitor how bond proceeds are spent?
• Which of the following is not typically associated with revenue bond transactions?
• From where is the underwriter's discount deducted?
• Where would the prohibition of swap transactions related to an entity's debt typically be found?
• A comprehensive post-issuance compliance program should primarily be designed to do what?
• What characteristic distinguishes an interest rate swap from other derivatives?
• What does legal debt capacity primarily consider?
• Which of the following bodies typically pays the GASB fee?
• Commercial Paper is an obligation that matures within how many days?
• For a particular bond issue with a level debt service schedule, which of the following is true?
• What are bank loans defined as?
• A serial bond structure is one in which:
• Under the Private Payment Test, what is the maximum percentage of principal or interest payments on bonds that can be secured by private business use?
• What is the primary purpose of the SEC Rule 15c2-12?
• For hiring a Municipal Advisor, what does the RFP need to clarify regarding fees?
• What does GFOA recommend for the use of structured finance products?
• What is the maximum percentage of bond proceeds that can be used for private business use according to the Private Business Use Test?
• What is the primary role of an underwriter in a negotiated sale?
• Which type of bonds focus on projects with environmental benefits?
• Where must the necessary items under CDAs be filed by issuers?
• In which of the following circumstances would an issuer be most likely to use a competitive sale?
• What financial metric indicates the ability of an entity to meet its debt obligations?
• When does the pre-pricing call take place?
• When there are no state and local laws prescribing the method of sale for debt, how should issuers select a method?
• Which statement best describes the escrow account for refunding bonds?
• When a bond is sold at a discount, how does its interest rate compare to market interest rates?
• What should be considered when developing an investor relations program?
• What primary role does the underwriter senior manager serve?
• Does the GFOA recommend issuing pension obligation bonds?
• What are default risk and credit risk associated with?
• Which of the following reflects the primary role of bond counsel?
• What does the front portion of the offering document (POS) include?
• How promptly must issuers file event disclosures on EMMA following a listed event?
• What is a common risk associated with POBs?
• Which of the following responsibilities does not apply to taxable debt?
• What is a key characteristic of LIBOR as it relates to financial contracts?
• What is a key characteristic of conduit bonds?
• What does GFOA recommend governments evaluate and disclose regarding environmental risks?
• What does "rolling down the yield curve" denote in refunding?
• What does GFOA typically advise regarding the use of variable rate debt instruments?
• Which of the following is considered a common short-term instrument?
• Do all governments share the same levels of debt capacity?
• What is meant by investment yield?
• Under what condition can project funds earn interest without yield restrictions for a temporary period?
• TANs, RANS, TRANs, BANs, and GANs are categorized as what type of financial instruments?
• During the 2-year spending period, which of the following must be allocated to expenditures?
• What is required to meet the spending exception during the 18-month spending period?
• Which of the following is a key guideline in structuring debt?
• What role do independent auditors play in municipal bond offerings?
• What primary responsibility does MSRB Rule G-42 impose on Municipal Advisors (MAs)?
• What defines designated bonds?
• Where are proceeds of refunding bonds typically placed?
• What payment methods are recommended by GFOA for municipal advisors when developing an RFP?
• What essential elements should an entity's debt policy include?
• Who are the largest group that purchases tax-exempt bonds?
• What does the GFOA recommend regarding the sale or securitization of property tax liens?
• Which of the following expenses can be capitalized within a bond issue?
• What should be considered for inclusion in a debt policy?
• What are Sustainability Bonds designed to support?
• In a negotiated sale, what is one of the responsibilities of a Municipal Advisor?
• Who does bond counsel primarily represent?
• Which section of the POS would you find the authorities and purposes of the bonds being offered?
• Which elements should be considered when evaluating the need for a credit rating?
• Which aspect of bank loans distinguishes them from bonds?
• What is the primary purpose of a continuing disclosure agreement (CDA)?
• What characteristic makes bank loans less favorable for certain entities?
• What must be filed when a rebate is owed?
• What is the function of the underwriting selling group?
• Which feature of variable rate debt is beneficial during periods of rising interest rates?
• Which of the following is considered a material event regarding the financial obligations of a municipal authority?
• What is one of the main factors that a comprehensive post-issuance compliance program should reflect?
• What does ESG stand for in relation to a government's credit profile?
• What is a common risk associated with revenue bonds?
• According to SEC Rule 15c2-12, what is a condition for an issuer’s agreement regarding continuing disclosures?
• What is critical for making informed decisions about bond investment returns?
• An issuer's obligation to provide ongoing financial information for the term of a borrowing is known as what?
• What should municipalities evaluate when considering voluntary disclosure?
• What document must underwriters receive from issuers to ensure compliance with continuing disclosure?
• What do GFOA recommendations suggest regarding the preparation of bond documents?
• What is the main advantage of issuing callable bonds?
• Who posts the POS in EMMA during a negotiated sale?
• Which of the following is a benefit of credit enhancement to an issuer?
• How does an advance refunding differ from a current refunding?
• What is the main advantage of governments issuing fixed-rate debt when interest rates are rising?
• What is typically true about short-term interest rates compared to long-term interest rates?
• What defines a derivative in the context of public finance?
• What kind of risk exposures should issuers disclose to investors?
• What does net revenue divided by debt service represent?
• What does MSRB Rule G-17 emphasize regarding an underwriter’s fiduciary duty?
• When must the electronic POS be distributed in relation to a competitive sale?
• What type of financing structure does a level debt service schedule represent?
• Who is responsible for paying the GASB fee?
• What is the primary purpose of developing an investor relations program for governmental bond issuers?
• Duration is defined as:
• When is it optimal for an entity to undertake a tax-exempt advanced refunding?
• In terms of bond proceeds, what is a key aspect of private activity bonds?
• What is a key component of a Municipal Advisor's role during a bond sale?
• What type of bonds are associated with projects yielding positive social outcomes?
• Which groups are subject to SEC Rules 10b-5, the anti-fraud provisions?
• A downward sloping yield curve indicates which of the following scenarios?
• What does MSRB Rule G-37 restrict?
• When must a government provide pertinent information about their operations and financial condition for a bond issue?
• From whom does an underwriter obtain an IRMA letter?
• Is voter approval required for revenue bonds?
• Which costs are explicitly paid by the issuer?
• Certificates of Participation (COPs) represent what type of financial instrument?
• What is true about laws related to municipal securities?
• How often is an arbitrage rebate calculated?
• According to GFOA, what is essential when using derivatives in government finance?
• What is the definition of a bond covenant?
• What is the main focus of underwriter's expenses?
• Which of the following does not provide an investor with information about the security of a municipal bond issue?
• What is the role of a bond trustee?
• How long should the Capital Improvement Plan (CIP) ideally cover?
• What must underwriters seek from issuers according to MSRB Rule G-17?
• For federal tax law purposes, how long must an issuer maintain records?
• How does the cost of taxable debt usually compare to tax-exempt debt?
• What is the key purpose of a refunding bond issue?
• What is the key reason to have formal post-issuance compliance policies?
• When should issuers disclose social factors that impact credit quality?
• What requirement is most likely associated with revenue bonds?
• Which payment models should NOT be used for compensating Municipal Advisors?
• What is the effect of using a website for disclosure by an issuer?
• When is a refunding generally considered worthwhile?
• Bond counsel on the governmental issuer's financing team renders an opinion on:
• Which of the following is NOT a material event for municipal securities according to the list provided?
• In bonds, what does a reserve fund typically secure?
• According to the Tax Cuts and Jobs Act of 2017, which type of bonds are prohibited for issuance?
• Within how many days must issuers inform underwriters of material changes in the POS?
• What does positive arbitrage represent in financial terms?
• What is the recommended minimum number of bids to receive for a competitive interest rate?
• What is a primary advantage of tax-exempt debt in financing?
• What is required of underwriters before bidding for or purchasing municipal securities, as per SEC Rule 15c2-12?
• Which of the following is a clear benefit of a negotiated sale bond offering in contrast to a competitive sale bond offering?
• Refunding bond issuances can generally be characterized as which two types?
• Who typically serves as a Trustee or paying agent in bond transactions?
• Why does the GFOA not recommend issuing Pension Obligation Bonds (POBs)?
• What does "level savings" refer to in the context of refunding bonds?
• How does an underwriter operate during a competitive sale?
• Bonds will sell at a discount under which condition?
• Which of the following is NOT typically included in debt management policies?
• Which of the following is a benefit of refunding bonds?
• What do debt management policies provide guidance on?
• How should Municipal Advisors be compensated?
• What primary function does a Placement Agent serve in bond issuance?
• In a competitive sale, bids are based on which of the following?
• What is a key element that the RFP for hiring a Municipal Advisor should contain?
• Who are some of the likely parties involved in the debt issuance process?
• Investment grade bonds are rated by which of the following rating agencies?
• What should be part of an entity's debt policy regarding investment of bond proceeds?
• Which attribute is most important for a General Obligation (GO) bond?
• How long does it typically take for bonds to close after pricing?
• The ability to call bonds away from investors is of particular value to the issuer when:
• How is credit enhancement typically expressed?
• What characterizes the refunding process?
• GFOA recommends providing insight into social factors in relation to:
• What constitutes a small issuer exception in bond issuance?
• What does the opinion of bond counsel provide confidence in?
• What obligation do issuers have under SEC Rule 15c2-12 regarding their financial information?
• What type of bonds are backed by revenues from specific projects or sources?
• What typically backs the issuance of Commercial Paper?
• Which technique is recommended for ensuring a timely debt service payment?
• When a bond is sold at a premium, how does its interest rate compare to market interest rates?