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Bonds 210: Municipal Bond Insurance

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1.
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.
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 is paid directly by investors of municipal bonds.
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False. Municipal bond insurance is paid directly by issuers of municipal bonds.
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.
Why is municipal bond insurance less widespread today than in the past?
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Strong credit ratings and historically low default rates reduce the need for insurance. Investors increasingly rely on credit ratings and market research, reducing demand for municipal bond insurance compared to previous years.