SIE Understanding Products and Their Risks Practice Question 8

Correct Answer: C

Explanation:

C: An insured bond issue having a higher credit rating than a noninsured issue is an effect of municipal bond insurance. Choices A and B are not effects of municipal bond insurance because the insurance protects the bondholder against default on the bond by the municipality. Choice D is incorrect because the bond issue would continue to have a credit rating, which would be higher.