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Bonds 210: Municipal Bond Insurance

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1.
The successor to the oldest municipal bond insurance company is _______.
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Ambac. The successor to the oldest municipal bond insurance company is Ambac.
2.
The risk that a government will be unable to repay the principal of a bond is called _______.
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Default risk. The risk that a government will be unable to repay the principal of a bond is called default risk.
3.
If a municipal bond covered by bond insurance defaults, the insurance company pays the bond's interest and principal payments to investors.
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True. That is how the insurance company fulfills its end of the bargain.
4.
Municipal bond insurance is paid directly by investors of municipal bonds.
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False. Municipal bond insurance is paid directly by issuers of municipal bonds.
5.
The process of assessing the risk of a bond is called _______.
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Underwriting. The process is necessary before a bond can be insured.