CPFO FINAL SCRIPT 2026 PUBLIC FINANCE
OFFICER QUESTIONS ANSWERS
COMPLETE A+
◉ Gross Spread
Answer: How bond underwriters are compensated. Expressed as a
dollar per $1000 bond figure.
Made up of: takedown, management fee, underwriting risk, and
expenses
◉ Takedown (component of gross spread)
Answer: The sales commission, compensation for selling the bonds.
◉ Management Fee (component of gross spread)
Answer: The fee paid for financial advice, document preparation,
and managing syndicate activities.
◉ Underwriting Risk (component of gross spread)
Answer: Compensation for the risk involved in committing to buy
and place bonds; rarely included currently
,◉ Tax Certificate
Answer: A document that provides information about a bond issue
in support of bond counsel's opinion that interest is exempt from
federal taxes and identifies the IRS arbitrage restrictions that apply
to the bonds.
◉ True Interest Cost
Answer: The rate that, when used to discount total debt service
payments, results in the bond purchase price.
◉ Net Interest Cost
Answer: The average interest rate on a bond issue
◉ Private Placement
Answer: The sale of bonds buy an issuer ( facilitated by an
underwriter)directly to a single investor or a small number of
sophisticated investors without a public offering; used because of a
faster sales process, or if issue was not rated, Limited disclosure is
available or a unique feature or problem must be discussion
◉ Sizing the Bond Issue
Answer: Determining the amount of bonds to be issued
, Takes into account the cost of the project, cost associated with
issuance, and interest earnings on invested proceeds
◉ Par Value
Answer: The face value of the bond, a.k.a. par amount
◉ Original Issue Premium
Answer: When an issuer receives a higher amount of proceeds than
the principal it repays and pays higher coupon interest rates in the
market value for comparable securities.
◉ Original Issue Discount
Answer: When an issuer receives fewer proceeds than the par
amount, but pays coupon interest on the bonds that are lower than
the market rate.
◉ Credit Enhancement
Answer: Bond insurance or letters of credit that provide added
assurance to investors the principal and interest payments will be
made on time and in full
Bonds sold with credit enhancement carry the rating of the credit
provider
OFFICER QUESTIONS ANSWERS
COMPLETE A+
◉ Gross Spread
Answer: How bond underwriters are compensated. Expressed as a
dollar per $1000 bond figure.
Made up of: takedown, management fee, underwriting risk, and
expenses
◉ Takedown (component of gross spread)
Answer: The sales commission, compensation for selling the bonds.
◉ Management Fee (component of gross spread)
Answer: The fee paid for financial advice, document preparation,
and managing syndicate activities.
◉ Underwriting Risk (component of gross spread)
Answer: Compensation for the risk involved in committing to buy
and place bonds; rarely included currently
,◉ Tax Certificate
Answer: A document that provides information about a bond issue
in support of bond counsel's opinion that interest is exempt from
federal taxes and identifies the IRS arbitrage restrictions that apply
to the bonds.
◉ True Interest Cost
Answer: The rate that, when used to discount total debt service
payments, results in the bond purchase price.
◉ Net Interest Cost
Answer: The average interest rate on a bond issue
◉ Private Placement
Answer: The sale of bonds buy an issuer ( facilitated by an
underwriter)directly to a single investor or a small number of
sophisticated investors without a public offering; used because of a
faster sales process, or if issue was not rated, Limited disclosure is
available or a unique feature or problem must be discussion
◉ Sizing the Bond Issue
Answer: Determining the amount of bonds to be issued
, Takes into account the cost of the project, cost associated with
issuance, and interest earnings on invested proceeds
◉ Par Value
Answer: The face value of the bond, a.k.a. par amount
◉ Original Issue Premium
Answer: When an issuer receives a higher amount of proceeds than
the principal it repays and pays higher coupon interest rates in the
market value for comparable securities.
◉ Original Issue Discount
Answer: When an issuer receives fewer proceeds than the par
amount, but pays coupon interest on the bonds that are lower than
the market rate.
◉ Credit Enhancement
Answer: Bond insurance or letters of credit that provide added
assurance to investors the principal and interest payments will be
made on time and in full
Bonds sold with credit enhancement carry the rating of the credit
provider
