FINRA FINRA Municipal Securities and Fixed Income 1 — Questions and Answers
Question 1: Which FINRA exam series is required for individuals who underwrite, trade, or sell municipal securities?
- Series 52 (Correct answer)
- Series 63
- Series 7
- Series 65
Correct answer: Series 52
The Series 52 (Municipal Securities Representative) exam is required for those who underwrite, trade, or sell municipal securities.
Question 2: What is the primary regulatory body that oversees municipal securities dealers and advisors in the US?
- MSRB (Correct answer)
- FINRA
- SEC
- CFTC
Correct answer: MSRB
The Municipal Securities Rulemaking Board (MSRB) is the primary self-regulatory organization for municipal securities dealers and advisors.
Question 3: Which type of municipal bond is backed solely by the full faith, credit, and taxing power of the issuing municipality?
- General obligation bond (Correct answer)
- Revenue bond
- Tax anticipation note
- Callable bond
Correct answer: General obligation bond
General obligation (GO) bonds are backed by the full faith, credit, and taxing power of the issuing government entity.
Question 4: A revenue bond issued to finance a toll highway would most likely be repaid from which source?
- Tolls collected from highway users (Correct answer)
- Local property taxes
- Federal grant funds
- State income taxes
Correct answer: Tolls collected from highway users
Revenue bonds are repaid from the specific revenue generated by the project they finance, such as tolls from a highway.
Question 5: What does 'par value' mean in the context of a fixed income security?
- The face value at which the bond will be redeemed at maturity (Correct answer)
- The current market price of the bond
- The coupon rate divided by market price
- The bond's yield to maturity
Correct answer: The face value at which the bond will be redeemed at maturity
Par value (face value) is the amount the issuer promises to repay the bondholder at maturity, typically $1,000 for corporate and municipal bonds.
Question 6: When interest rates rise, what typically happens to the price of existing fixed-rate bonds?
- Bond prices fall (Correct answer)
- Bond prices rise
- Bond prices remain unchanged
- Bond prices become more volatile only
Correct answer: Bond prices fall
Bond prices and interest rates move inversely; when rates rise, existing bonds paying lower fixed rates become less attractive, causing their prices to fall.
FINRA FINRA Municipal Securities and Fixed Income 1
Which FINRA exam series is required for individuals who underwrite, trade, or sell municipal securities?