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Bonds 210: Municipal Bond Insurance

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1.
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.
2.
Insured municipal bonds provide investors with the security that their interest and principal will be paid.
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True. This is the appeal of insured municipal bonds.
3.
Insured bonds generally have lower yields than non-insured bonds.
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True. Because of the safety feature offered by insurance, issuers can offer lower yields.
4.
All municipal bonds are insured by MBIA, Ambac, or Assured Guaranty.
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False. Governments can also get their bonds insured by a wide variety of smaller financial guaranty agencies.
5.
Generally, municipal bond insurance must be continuously renewed over the life of the municipal bond.
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False. Generally, municipal bond insurance is good for the entire life of the bond; an exception can exist in the case of unit investment trusts.