Pricing of Municipal Securities

What this video covers

• Matching term bonds to dollar price quotes and serial bonds to yield or basis quotes, and why mixing these pairings is a top exam trap
• Converting a dollar price quote to actual cash paid per $1,000 par value, and recognizing that basis simply means yield to maturity (YTM) in municipal speak
• Why the buyer pays accrued interest to the seller at settlement, and how the buyer recovers that outlay from the next full coupon payment
• Calculating accrued interest using the 30/360 formula with annual coupon divided by 360, multiplied by days from last coupon to settlement
• Why February counts as 30 days and every month counts as 30 days under 30/360, and how this differs from actual/actual for U.S. Treasury securities
• Handling odd first coupons (short or long) with the same 30/360 convention rather than actual calendar days
• Spotting answer choices that result from applying actual calendar days to a municipal bond question and avoiding that trap on exam day