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1.
Individuals who want to invest in general obligation municipal bonds will need at least $5,000 to get started.
False. By purchasing shares in a pool of bonds, such as a mutual fund or unit investment trust, it is possible to invest in general obligation bonds for less than the typical face-value price of $5,000.
2.
All of the following are ways to make a $1,000 investment in general obligation bonds except _______.
Brokers. Brokers typically require minimums of greater than $5,000 to purchase general obligation bonds. The other options are general obligation bond pools that provide a much lower buy-in price.
3.
Which of the following is an example of an ad valorem tax?
Property tax. This is an example of an ad valorem tax, a tax levy based on the value of property or real estate.
4.
The tax status of general obligation municipal bonds makes them an undesirable investment for individuals in the higher tax brackets.
False. The tax-free status of general obligation municipal bond interest makes these bonds desirable for those in the higher tax brackets.
5.
A municipality's full faith and credit includes municipal taxes, bond issues, and user fees.
False. A municipality's full faith and credit includes taxation and borrowing, but not project revenue like user fees.
