General Characteristics of Municipal Securities

What this video covers

• Why municipal bond interest is exempt from federal income tax, how triple tax-free status works, and why issuers can offer lower coupons than corporates
• The Municipal Securities Rulemaking Board (MSRB) writes rules but has no enforcement authority; FINRA and the Securities and Exchange Commission (SEC) enforce them
• Why municipal securities are exempt from Securities and Exchange Commission (SEC) registration but still fully subject to anti-fraud provisions
• Yield basis as the default quoting method for municipal bonds versus dollar price as a percentage of par, and when each applies
• How the $1,000 par value per bond differs from the $5,000 minimum denomination, and why mixing them up destroys pricing calculations
• The 30/360 day count convention for accrued interest, and why interest accrues up to but not including the settlement date
• Serial bonds with multiple maturities versus term bonds with a single maturity, and why balloon maturity is a serial structure
• What the bond counsel legal opinion actually covers (legality of issuance and tax-exempt status), what it never covers (creditworthiness), and what ex-legal means