Series 7: Chapter 3 Practice Questions

Chapter 3 Practice Questions

1. 1. The owner of a house with a market value of $450,000 and an assessed value of $300,000, and with an ad valorem tax of 4 mills would pay a property tax of:
2. A. $1,800
3. B. $1,200
4. C. $12,000
5. D. $18,000
6. 2. All of the following bonds would be backed by ad valorem taxes except:
7. A. A bond issued by the Philadelphia Water Department
8. B. A bond issued by Howard County
9. C. A bond issued by Western School District
10. D. A bond issued by the City of Cincinnati
11. 3. Which of the following are ultimately backed by the full faith and credit of the issuer?
12. I. Moral obligation bonds
13. II. General obligation bonds
14. III. Double-barreled bonds
15. IV. Lease revenue bonds
16. A. I and II
17. B. III and IV
18. C. II and III
19. D. II and IV
20. 4. Local government investment pools may have as participants:
21. A. Commercial institutional investors
22. B. Government entities
23. C. Individual investors
24. D. Government employees
25. 5. Which criteria would qualify an IDR bond for federal tax exemption?
26. A. It must be secured with public funds.
27. B. It can only be issued to construct new facilities.
28. C. It is used for a specific project that has a public use.
29. D. It exceeds $10 million.
30. 6. Which of the following municipal bonds are always tax-exempt?
31. A. Private activity bonds
32. B. BABs
33. C. Public purpose bonds
34. D. AMT bonds
35. 7. A Build America Bond may:
36. I. Provide a 35% subsidy on the interest as a tax deduction
37. II. Reimburse the issuer for 35% of the interest paid to investors
38. III. Provide a 35% subsidy on the interest as a tax credit
39. IV. Provide a 35% subsidy on the interest as an additional interest payment
40. A. I or II
41. B. I or IV
42. C. II or III
43. D. III or IV
44. 8. The town of