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Bonds 210: Municipal Bond Insurance

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1.
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.
2.
A CUSIP number identifies a municipal bond for tax purposes.
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False. The CUSIP number is used to identify the security when it is traded and settled.
3.
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.
4.
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.
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.