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Bonds 210: Municipal Bond Insurance

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1.
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.
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.
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.
4.
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.
5.
The largest issuer of municipal bond insurance is _______.
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Assured Guaranty. Assured Guaranty dominates the municipal bond insurance market at present.