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Bonds 210: Municipal Bond Insurance

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1.
Insured municipal bonds are not subject to interest rate risk.
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False. Insurance does not protect municipal bonds from interest rate risk.
2.
Municipal bonds are often assessed by underwriters before they are sold to the marketplace.
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True. They do this to learn of any risks in the bonds.
3.
All municipal bonds are insured by MBIA, Ambac, Build America Mutual, or Assured Guaranty.
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False. Governments can also get their bonds insured by a variety of smaller financial guaranty agencies, and some of them even do without insurance.
4.
Municipal bond insurance helps to ensure _______.
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All of the above. Municipal bond insurance helps to ensure the payment of bond interest, principal, and sinking fund payments.
5.
Insured bonds have higher credit ratings than non-insured bonds.
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True. The insurance makes them look safer in the eyes of bond raters.