Municipal bond

Municipal Bonds If you are a socially conscious investor, or someone who is interested a tax free investment, municipal bonds may be a good fit for you. Since municipalities must operate on a budget, and due to the limits of taxation and fees, the list of infrastructure upgrades often goes unfunded. Unless some gracious benefactor makes a donation, cities usually tap the capital markets for funding by issuing munis (municipal bonds). There are two different types of municipal bond structures

State of Connecticut Municipal SWAP Case Study An Analysis and Recommendation of Synthetic Fixed Rate Derivatives State of Connecticut Municipal Swap Case Study: An Analysis and Recommendation of Synthetic Fixed Rate Derivatives Dear Mr. Benson R. Cohn, We, the State of Connecticut, have typically financed the long-term capital needs of the State through tax-deductible General Obligation bonds. This allowed us to achieve a lower costof-debt than similar taxable bonds. In stark contrast to the fixed-rate

1. What are municipal bonds? Describe two different types of municipal bonds. Municipal bonds are debt securities issued by state or local governments to pay for ongoing products such as roads, schools, and airports. The two types of municipal bonds are general obligation bonds or revenue bonds. General obligation bonds are backed by the taxing power and credit of the government. Revenue bonds are backed by profits from the project for which the bond was issued. 2. What is asset allocation? Why is

talk show indicated the existence of an unclaimed municipal bond issued in 1883 by a town in Missouri. The bond was $100 with an interest rate on 10%. At a compound interest, what would be the bonds value in 2010. 2. (a) Joan read that a company issued eight-year, zero-coupon bonds at a price of 327 per 1,000 par value. The question asked, was the yield on these bonds 15 percent, as Joan had calculated. Yes! (b) Assuming that bond discount amortization is tax deductible by the issuing

Introduction of Municipal Bonds in United States 1. What is bond? “Individuals and businesses lend their savings to borrowers. In exchange, borrowers give lenders a debt instrument, which is called bonds, representing a promise by borrowers to pay interest income to lenders on the principal (the amount of money borrowed) until the principal is repaid to the lenders” (Feldstein & Fabozzi, 2011). 2. Why do State and local government issue bonds? Public departments

of fixed rate, long term municipal bonds with ratings between AA-AAA and combine them with an interest rate swap to create short term tax exempt floating rate bonds. The tax-exempt status creates a high level of demand particularly from investors who seek tax exempt cash flow as a source of annual income and revenue. The buyers of TOBs are for the most part money market mutual funds. Money market mutual funds are guided by certain regulations as to what type of bonds they can have in their portfolio

Economic update The U.S. economy appears to be in upward swing following three consecutive quarters of weak GDP. Underpinning third quarter growth of 3.5% was robust consumption, which posted a 3% annual change. Expectations for the fourth quarter are for 1.9% growth, placing the yearly change at 1.6%. Although 2016 will match the weakest yearly growth rate since the financial crisis ended, the focus is clearly on the strength in the past two quarters and outlook over the next three years.

proposals was the issuance of “Green Bonds”, an innovative method of encouraging investment in environmental and sustainable development projects across the globe. Green bonds have

Fractionalization and the municipal bond market Daniel Bergstresser* Randolph Cohen** Siddharth Shenai*** (First version April 2010. Current draft June 2011. Comments welcome.) Abstract We study the impact of ethnic and religious fractionalization on the U.S. municipal debt market, and find that issuers from more ethnically and religiously fractionalized counties pay higher yields on their municipal debt. A two standard deviation increase in religious fractionalization is associated

on Financial Disclosure & Transparency in the Municipal Bond Market ISSUE Today, the municipal bond market holds nearly $3.7 trillion in principal outstanding from over one million unique issues. This debt primarily finances public projects for the 46,000 local and state government issuers participating in the market. Unfortunately, exemptions for disclosure requirements as well as an ineffective regulatory structure cultivated a municipal bond market that, unlike the corporate equity market