Ability to pay refers to a financial criterion used in various contexts such as finance, taxation, industrial relations, municipal bonds, and public policy. It represents the capacity of an individual or entity to meet financial obligations based on their income or economic status.
A method for comparing returns on taxable corporate bonds and tax-free municipal bonds to determine the higher after-tax return. This helps investors make more informed choices considering their tax brackets.
An arbitrage bond is a type of municipal bond issued to gain an interest rate advantage by refunding higher-rate bonds in advance of their call date. The proceeds from the lower-rate refunding issue are invested in higher-yielding treasuries until the first call date of the higher-rate issue being refunded.
Bonded debt refers to the portion of a corporation's or government's overall debt that is represented by bonds it has issued. It specifically concerns the indebtedness that is contracted under the obligation of these bonds.
Book-entry securities are securities that exist only as electronic records and do not have a physical certificate, facilitating efficient trading and ownership transfer.
Taxable bonds issued by municipalities and designed to encourage spending on infrastructure and create jobs. The issuance of these bonds was authorized by the American Recovery and Reinvestment Act of 2009, and the program ended on December 31, 2009.
A credit analyst is a professional responsible for evaluating the financial affairs of individuals or corporations to determine their creditworthiness. They assess the risk associated with lending and determine credit ratings.
Equivalent Taxable Yield is a comparison of the taxable yield on a corporate bond with the tax-free yield on a municipal bond. Depending on the tax bracket, an investor's after-tax return may be greater with a municipal bond than with a corporate bond offering a higher interest rate.
A municipal bond that does not have the legal opinion of a bond law firm printed on it, necessitating buyers to be warned that the bond lacks the usual legal opinion.
Stocks and bonds that are exempt from certain Securities and Exchange Commission (SEC) and Federal Reserve Board (FRB) rules. Examples include government and municipal bonds, which are exempt from SEC registration requirements and FRB margin rules.
Fixed-income investments are financial instruments that provide a fixed rate of return in the form of periodic interest or dividends until maturity.
In the context of financial markets, the term 'Floating Supply' refers to the total number of securities, such as municipal bonds or stocks, which are presently available for purchase by investors in the open market.
Flow of funds in economics refers to the way in which capital moves across various sectors of the economy, transferring from savings surplus units to savings deficit units through financial intermediaries.
A General Obligation Bond (GO Bond) is a type of municipal bond backed by the full faith and credit of the issuing government, which has the authority to levy taxes to repay bondholders.
A Good-Faith Deposit is a monetary advance indicating intent to pursue a contract to completion and is used in various settings including commodities, securities, and real estate transactions.
A mutual fund designed to produce current income for shareholders through interest, dividends, or other income streams.
A debt instrument issued by a municipality to finance assets, which are then leased to private industrial businesses to promote local economic development.
Industrial Development Bonds (IDBs) are debt obligations issued by state or local governments for funding the capital investments in the trade or business operations of nonexempt persons.
An industrial revenue bond (IRB) is a type of municipal bond issued to finance industrial development projects for private corporations. They are typically used for the construction or acquisition of facilities and equipment, encouraging economic growth and job creation.
A legal opinion is a statement as to legality, written by an authorized official such as a city attorney or an attorney general. In the context of municipal bond issuances, it typically pertains to the legality of the bond issue, often prepared by a law firm specializing in public borrowings.
A moral obligation bond is a tax-exempt bond issued by a municipality or a state financial intermediary and backed by the moral obligation pledge of a state government. The state's obligation to honor the pledge is moral rather than legal because future legislatures cannot be legally obligated to appropriate the funds required.
A Municipal Revenue Bond is a type of bond issued by municipalities to finance public works projects such as bridges, tunnels, or sewer systems. The principal and interest payments are supported directly by the revenues generated from the project.
Nontaxable interest refers to interest income derived from certain sources that is excluded from federal taxable income, such as interest on state and municipal debt obligations.
A presold issue refers to the issuance of municipal bonds or government bonds that is completely sold out before the price or yield is publicly announced. This typically happens through prerelease sales to institutional investors.
A type of municipal bond issued to finance revenue-generating projects and repaid with the revenues produced by those projects, such as toll bridges, highways, educational facilities, hospitals, sewer systems, stadiums, or other public facilities.
Revenue bonds are municipal bonds where the repayment of the principal and interest is secured by the revenue generated from the specific project they finance, such as toll bridges or utilities.
A serial bond is a bond issue, usually of a municipality, with various maturity dates scheduled at regular intervals until the entire issue is retired. Each bond certificate in the series has an indicated redemption date.
The classification of stocks and bonds according to risk, issued by Standard & Poor's Corporation. S&P's ratings range from Investment Grade for low-risk investments to speculative grades for higher-risk investments.
Tax-Equivalent Yield is a pretax yield that a taxable bond must offer to match the tax-free yield of a municipal bond, calibrated to an investor's specific tax bracket.
Underlying debt refers to outstanding financial obligations secured by collateral, typically used in real estate and securities contexts, involving senior debt or debt of municipal government entities with broader credit responsibility.
