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FINRA Municipal Securities and Fixed Income Flashcards

6 cards from real FINRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 FINRA Municipal Securities and Fixed Income flashcards as text

  1. What is 'yield to maturity' (YTM) on a bond?

    Answer: The total return if held until maturity, accounting for price and all coupon payments

    YTM represents the total annualized return an investor earns if the bond is held to maturity, factoring in the purchase price, coupon payments, and face value repayment.

  2. A municipal bond trading at a price above its par value is said to be trading at a:

    Answer: Premium

    A bond trading above its face (par) value is trading at a premium, usually because its coupon rate exceeds current market interest rates.

  3. Which of the following best describes a 'callable' municipal bond?

    Answer: The issuer has the right to redeem the bond before its maturity date

    A callable bond gives the issuer the option to redeem the bond before its stated maturity date, typically when interest rates decline.

  4. What is the 'coupon rate' of a bond?

    Answer: The annual interest rate paid on the bond's face value

    The coupon rate is the fixed annual interest rate stated on the bond, calculated as a percentage of the bond's par value.

  5. Under MSRB rules, a registered municipal securities dealer must deliver an official statement to a customer by:

    Answer: Settlement of the transaction

    MSRB Rule G-32 requires dealers to deliver the official statement to customers no later than the settlement date of the transaction.

  6. What is a 'zero-coupon' municipal bond?

    Answer: A bond that pays no periodic interest and is issued at a deep discount to face value

    Zero-coupon bonds make no periodic interest payments; instead, they are sold at a discount and mature at face value, with the difference representing the investor's return.

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