CPFO DEBT MANAGEMENT EXAM
QUESTIONS AND VERIFIED ANSWERS
1.1.1 If it is not allowed to enter into swap transactions related to an entity's
debt, where would that be stated? - ANSWER Debt Policy
1.1.1 What should an entity's debt policy include? - ANSWER Debt issuance
process, managing the debt portfolio, guidelines for structuring
A downward sloping yield curve CANNOT be consistent with? - ANSWER
Investors anticipate inflation will be lower in the future.
1.1.2 What is true about LIBOR? - ANSWER LIBOR can not be referenced in
new and needs to be phased out of existing financing contracts.
1.2.1 Do all governments have the same debt capacity? - ANSWER No, each
government determines for itself the appropriate level of debt capacity
consistent with state law.
2.1.1 What is the most important attribute of a GO bond? - ANSWER typically
is backed by the full faith and credit of the government and its taxing authority.
2.1.2 All of the following have association with revenue bond transaction? -
ANSWER debt service reserve requirement, debt service coverage test, trust
indenture
, 2.1.3 TANs, RANs, TRANs, BANs, and GANs are all types of: - ANSWER
short term municipal note obligations
2.1.4 What determines whether or not an entity can be a participant in a bank
loan? - ANSWER state law and you have consulted the option with your
municipal advisor and/or others on your financing team and determined it is an
optimal financing for your entity.
2.1.5 Which of the following requirements are NOT taxable debt obligations? -
ANSWER arbitrage tracking
2.1.6 The following are some advantages of a negotiated sale bond offering over
a competitive sale bond offering. Which one is an unambiguous advantage? -
ANSWER To attract a particular type of investor
2.1.6 An issuer would be most likely to use a competitive sale when? -
ANSWER Issuer plans to sell bonds that are well understood by the investor
community.
2.1.7 Compared to similar non-callable securities, callable securities have: -
ANSWER Higher required and expected yields relative to non-callable
securities
2.1.7 The right to call bonds away from investors is most valuable to the issuer
when: - ANSWER interest rates have fallen significantly below the coupon
interest rates on outstanding bonds.
Variable debt used in financing has the following characteristics: -
ANSWER
QUESTIONS AND VERIFIED ANSWERS
1.1.1 If it is not allowed to enter into swap transactions related to an entity's
debt, where would that be stated? - ANSWER Debt Policy
1.1.1 What should an entity's debt policy include? - ANSWER Debt issuance
process, managing the debt portfolio, guidelines for structuring
A downward sloping yield curve CANNOT be consistent with? - ANSWER
Investors anticipate inflation will be lower in the future.
1.1.2 What is true about LIBOR? - ANSWER LIBOR can not be referenced in
new and needs to be phased out of existing financing contracts.
1.2.1 Do all governments have the same debt capacity? - ANSWER No, each
government determines for itself the appropriate level of debt capacity
consistent with state law.
2.1.1 What is the most important attribute of a GO bond? - ANSWER typically
is backed by the full faith and credit of the government and its taxing authority.
2.1.2 All of the following have association with revenue bond transaction? -
ANSWER debt service reserve requirement, debt service coverage test, trust
indenture
, 2.1.3 TANs, RANs, TRANs, BANs, and GANs are all types of: - ANSWER
short term municipal note obligations
2.1.4 What determines whether or not an entity can be a participant in a bank
loan? - ANSWER state law and you have consulted the option with your
municipal advisor and/or others on your financing team and determined it is an
optimal financing for your entity.
2.1.5 Which of the following requirements are NOT taxable debt obligations? -
ANSWER arbitrage tracking
2.1.6 The following are some advantages of a negotiated sale bond offering over
a competitive sale bond offering. Which one is an unambiguous advantage? -
ANSWER To attract a particular type of investor
2.1.6 An issuer would be most likely to use a competitive sale when? -
ANSWER Issuer plans to sell bonds that are well understood by the investor
community.
2.1.7 Compared to similar non-callable securities, callable securities have: -
ANSWER Higher required and expected yields relative to non-callable
securities
2.1.7 The right to call bonds away from investors is most valuable to the issuer
when: - ANSWER interest rates have fallen significantly below the coupon
interest rates on outstanding bonds.
Variable debt used in financing has the following characteristics: -
ANSWER
