Exercise
Answer the following questions.
1.Which of the following characteristics are most likely to generate confidence in a GO bond?
I.The mayor of the issuing municipality serves four-year terms.
II.The municipality is home to several retirement communities.
III.The net overall debt per capita is $1,750.
IV.The net debt to assessed valuation is not much higher than the net debt to estimated real valuation.
A.I and II
B.III and IV
C.I and III
D.II and IV
2.The city of Smithville has a population of 150,000 people. It has $200 million in outstanding GO bonds, $500 million in revenue bonds, and its citizens owe $100 million in overlapping debt to the county. Smithville currently has $50 million in cash and reserves. What is the net overall debt per capita of Smithville?
A.$1,666.67
B.$5,333.33
C.$5,000.00
D.$5,666.67
Answers
1. C. A municipality with a strong governing official, including one who serves four-year terms or greater, is likely to inspire more confidence than one with a weak governing official. Also, a municipality with net overall debt per capita that does not exceed $2,000 to $5,000 indicates a low tax burden on local res