Series 7 Exam Question 35: Answer and Explanation

Question: 35

All of the following affect the marketability of an outstanding municipal bond EXCEPT

• A. the rating
• B. the dated date
• C. the maturity
• D. the issuer's name

Correct Answer: B

Explanation:

B. How marketable (easy to trade) a security is depends on several factors. Certainly the rating matters because higher-rated bonds are more easily traded. The maturity matters because shorter-term bonds are more actively traded. Also, the issuer's name matters because it is important for investors to know if the issuer has a good reputation for paying interest and principal on time. So, out of the choices given, the dated date (the first day a bond starts accruing interest) is not a factor because that only matters on the initial offering.