All Courses > Bonds > 200
Bonds 210: Municipal Bond Insurance

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Insured municipal bonds are not subject to interest rate risk.
Choose wisely. There is only one correct answer.
False. Insurance does not protect municipal bonds from interest rate risk.
2.
A CUSIP number identifies a municipal bond for tax purposes.
Choose wisely. There is only one correct answer.
False. The CUSIP number is used to identify the security when it is traded and settled.
3.
If a municipal bond covered by bond insurance defaults, the insurance company pays the bond's interest and principal payments to investors.
Choose wisely. There is only one correct answer.
True. That is how the insurance company fulfills its end of the bargain.
4.
The risk that a government will be unable to repay the principal of a bond is called _______.
Choose wisely. There is only one correct answer.
Default risk. The risk that a government will be unable to repay the principal of a bond is called default risk.
5.
The successor to the oldest municipal bond insurance company is _______.
Choose wisely. There is only one correct answer.
Ambac. The successor to the oldest municipal bond insurance company is Ambac.