CGFO Debt Administration 3

Question 1

What distinguishes a current refunding from an advance refunding of municipal bonds?

Accepted Answer

Current refundings retire old bonds within 90 days; advance refundings retire them more than 90 days later

Answer

A current refunding retires the old bonds within 90 days of issuance; an advance refunding places proceeds in escrow for more than 90 days before the old bonds are called.

Question 2

Which federal tax law change in 2017 significantly impacted advance refunding of tax-exempt municipal bonds?

Accepted Answer

The Tax Cuts and Jobs Act eliminated tax-exempt advance refunding

Answer

The Tax Cuts and Jobs Act of 2017 (effective January 1, 2018) eliminated the ability to issue tax-exempt bonds for advance refunding purposes.

Question 3

In a competitive bond sale, what document invites underwriters to submit bids?

Accepted Answer

Notice of sale

Answer

The notice of sale (or notice of bond sale) is the advertisement that specifies bid requirements, sale date, bond terms, and evaluation criteria for competitive sales.

Question 4

What is the role of an escrow agent in a bond refunding transaction?

Accepted Answer

To hold and invest refunding proceeds in government securities until old bonds are retired

Answer

The escrow agent holds refunding bond proceeds invested in Treasury or agency securities, releasing funds on schedule to retire the refunded bonds.

Question 5

Which GFOA best practice recommends that governments adopt formal, written debt policies?

Accepted Answer

GFOA recommends written debt policies to guide issuance decisions, set limits, and ensure consistency

Answer

GFOA strongly recommends that governments adopt comprehensive written debt policies to promote informed decision-making, protect credit quality, and ensure accountability.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Debt Administration 3