Series 7 Exam Prep Underwriting Municipals. The Spread.
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- Опубліковано 29 сер 2024
- Process and participants, types of municipal bonds, types of syndicates, participants in the underwriting and components of the spread.
0:01 Introduction
1:45 Opening process for underwriting Municipal Bonds
5:54 Municipal Financial Advisor
9:20 GOs versus Revenues
Double barrel, Trust Indenture, Coterminous debt, voter approval or no voter approval, flow of funds (net revenue or gross revenue), feasability study, credit enhancement-insurance.
31:56 Legal opinion done by bond counsel.
1. Exempt from '33 (Official Statements or OS)
2. Legislative authority
3. Federally tax exempt
Unqualified (without reservations) or qualified (with reservations)
41:10 Municipal Financial advisor role
Negotiated (issuer selects the underwriter) versus competitive (syndicates bid)
43:16 Notice of Sale in Bond Buyer, notice of sale published in the Bond Buyer
53:00 Very important answer set
54:54 Formation and types of Syndicate(s)
Western (divided) or Eastern (undivided)
Winning Syndicate provides issuer with lowest net interest cost (NIC)
Participants: Manager, underwriter, and selling group
1:06:00 Review of syndicate members. Their roles and operation of the syndicate.
Manager or managing underwriter (member of the syndicate), underwriter (member of the syndicate), selling group (Members of a selling group are not members of the syndicate and are never liable for unsold securities).
1:08:56 Components of Municipal spread
The spread is the difference between what investor pay and the issuer receives.
Additional takedown plus selling concession equals the total take down.
Take note the additional takedown is NOT an individual component of the spread.
Selling concession is typically the largest individual component of the spread.
Management fee plus additional takedown plus selling concession equals the spread.
Management fee is typically the smallest individual component of the spread.
1:15:14 Very important answer set
1:16:35 Another very important answer set
I thank God for finding your lectures in UA-cam!
Glad are finding my lectures helpful.
Was so confused when I was reading the manual- didn’t thought this will be such a heavy tested chapter so here I come. Watching your video is so much more helpful
Revenue bond need bond indenture what about GO bond? I thought one of them uses official statement
Both types will have a trust indenture and both will be offered with an official statement. Those are two different documents
9:29 is an extremely helpful slide
I think I finally remembered all of this
Your lectures have been very, very helpful to me, esp the options lectures which I’ve watched in their entirety 3x. My series 7 is next week. Please send prayers, good vibes, thoughts, or all three lol!
Thank you for doing these lectures!
Glad they are helpful. How are you scoring on practice exams?
@@Series7Guru 80 on practice exams. Mid, high eighties on simulated exams.
That will get it done.
These were such helpful visuals on the syndicate breakdown and the spread. Thank you so much!
Glad it was helpful! Lots and lots of muni questions so it is target rich on your Series 7 exam.
Another fabulous lecture Dean! No sound effect at the end though...
Also in general, I love your usage of the answer set concept. It's incredibly helpful and useful.
Thanks. Hit the mark on the mark on this one.
0:10 opening explanation
1:45 Underwriting Municipals opening process for underwriting Munis
5:54 Muni issuer roles
9:20 Types of Muni issues with Rules
Double barrel, Trust ind, Coterminous debt, voter approval, flow of funds, studies, credit enhancement, insurance.
31:56 Legal opinion
O.S. statement, taxation, legislative rules, unqualified vs qualified
41:10 Municipal Financial advisor role
Negotiated, competitive, Notice of sale, MSRB rules, enforcement of rules
54:54 Formation of Syndicate(s)
Western vs Eastern
Winning Syndicate
Manager, underwriter, selling group responsibilities
1:06:00 Review of Syndicate roles and operations
Member, underwriter, selling group
1:08:56 Components of Municipal spread
Structure of the spread
C+A=total take down. C+A+M=Spread
Concession
Additional take down
Management fee
1:15:14 Components of Spread test review
Send me venmo request and I will send your payment. Thank you so much.
@@Series7Guru Thank you for doing these. I will continue to do them as I continue my studying. Save it for Rocket earners.
@@Series7Guru probably want to put this in description. Just for potential future edit purposes
Another great break down for Muni Bonds, the Syndicate breakdown and spread were easy to understand. Thanks for your videos. Making it my business to watch everything on Series 7 have my test next week.
Munis is target rich!
This makes my life easier! Great lecture
Thanks.
thank you for these lectures! they help a lot!!
Glad you are finding them helpful
thanks dean! my test is oming up and its been hard o pinpoint what i need to focus on. your videos are GREAT!
Thanks. Glad you are finding them helpful.
Take my test in two days and man your videos have been helpful. I don’t know why but I do not feel to confident! Been scoring 78-80 on STC final exams but on there green light exams ( different word bank) I’m barely scratching the 60-65%. I will watch all your videos between now and then
“Q bank” not “word bank”
Take the test! Don't let the test take you! Those scores indicate you are track to make your mark. Stay the course!
@@Series7Guru you’re correct! Thanks 🙏🏾
Did you pass?
@@mariorazy yes I did 🙌🏾
Another great supplement!!! Thank you !
Glad you found it helpful
Super helpful lecture Dean! Thank you !!
Glad you found it helpful.
Hi @deantinney I fully appreciate all your videos. I recently started in investment banking and have watched the majority of your tutorials, sometimes multiple times to further my understanding while reading. I have passed the SIE, and the 79, and now need to retest for the 52 in a month. I would love and appreciate if you could do more videos specifically geared toward the 52. I have watched all the Muni videos and most of your other videos, but would appreciate so much if you could create a lesson or two specifically for the 52 with maybe some new information that might not have been covered in the other Muni videos. Many thanks in advance for your consideration!
Kudos on the 79! That is a real beast. Not sure what the 52 test taking viewership universe is. I will do some homework and see if it makes sense. There is still lots of work (content) to be added for Series exams where I know what the audience would be. But love lecture requests. Some of our most popular lectures come from requests. Wll circle back. The exam yours truly came closest to failing was the Series 53. Hubris on my part. I said to myself, what can they ask me a muni bond I don't know. Actually, quite a bit. lol.
Great video! Do we get tested on calculations for this or just recognizing the components of the spread? For the series 7
You will be tested on hypothetical compensation to participants in the underwriting
Hey Dean I was curious when you’ve said in your videos do some fonts practice tests are you referring to the SIE practice test? I was looking for the 7 and didn’t see anything for the 7.
There is an entire playlist of Series 7 Practice tests and practice questions
Dean awesome content thank you! On my first attempt on the S7 last month I got a question about a registered rep in a joint account and he owned 30% of the account. Then the joint account wrote a check for $250 which the registered rep signed. The question was revolving around how much of the check is the registered rep liable for? Options were: the 30% of the check, the whole check, none of the check and something else I don't remember. How much would the registered rep be held liable? Going for my second attempt tomorrow!
Assuming it was TIC. If so, 30%. Sounds like a funky draw for sure. Sending you good test vibes for tomorrow.
@@Series7Guru Dean, crazy how different the test draws I got were. Passed this morning! I think I would classify my first attempt as the "draw from hell." Passed this attempt though after watching all your videos! Glad to give you some information I saw on the exam if you would like...
"You got a mouse in your pocket" gets me every time lol
Yep. No we in a western or divided syndicate. You eat what you takedown. Usually used in firm commitment underwritings.
@@Series7Guru What videos would you recommend for suitability (other than the explication?)... i have my exam the day after tomorrow and scoring a 63 on my finals... its by far my weakest topic...
Components of Municipal Spread (SAM) largest to least.
Selling concession
Additional Takedown
Management fee
Good one.
Ty
You are welcome. This lecture is target rich.
Hey Dean, In this video around the 24 minute mark you are talking about flow of funds and that a Net Revenue pledge goes towards debt service first but according to my TC textbook, it says operations and maintenance is first.. can you help?
Never mind, you correct yourself right after lol. Thanks Dean!
Listen again. I did not say that. Net revenue pledge Operations and Maintenace Fund has priority and Gross Revenue Pledge Debt Service Fund has priority.
@01:01:40 whoa! you got a mouse in your pocket? ;) Had to pause the video to laugh. hahaha
lol
hi dean. not sure how familiar you are with the current Kaplan edition LEM. but just to confirm this is the video that will correspond with unit 5 Kaplan "Municipal Securities" correct?
or is that more in line with the municipal bond video you've posted.
The other video matches unit 5 better.
@@Series7Guru got it. yes just realizing this is unit 1
46:00
Hi Dean, Thanks for your lectures, They are very helpful.. I am a bit confused about the definition of the NIC, (Net Interest Cost), My understanding, that it is: The common calculation used for comparing bids and awarding the bond issue. How is that works? Thank you.
Yes. Remember price up, yield down. So syndicate that gives the highest price for the bonds to the issuer will result in the lowest net interest cost to the issuer.
thank you, dean, I am wondering will you have a suitability lesson? thank you!
Great suggestion. Yes. Let me give it some thought about how to organize it. When are you testing? I will try to publish before then. Some suitability coaching. If you are very good at the investment vehicles you will be better prepared to recognize quickly recommendations that are clearly unsuitable and can be removed in the answer set by process of elimination. For example, liquidity don't recommend a partnership because they are not liquid. The other challenge is that most suitability questions are very subjective. They are judgement questions. So take advantage when they are not. For example, tax free or taxable equivalent calculations give the answer instead of judgement. Another example, when recognition instead of judgement like investor needs a set some of money at some future date and/or wishes to eliminate call risk we recommend a zero coupon bond.
@@Series7Guru 02/23, thanks a lot=) i always rmb than muni / gov bond... tax exempted / deferred for high tax ppl.
Suitability lecture is ready to go. Will publish in the next couple of days.
Hi Dean! I came across this question (ID: 1440047) in my Kaplan Q bank. Are Muni Note terms less than one year, or like this question is implying anything less than 3 years? Thanks for the feedback!
Yes. For test purposes tax free money market securities typically found in a tax free money market fund. You will receive a question about TANs, TRANs, and BANs.
@@Series7Guru So just to clarify, the Kaplan explanation is correct? Anything maturing in less than 3 years is considered a Muni note?
@@entertainmentcorner9198 yes but that isn't the testable point. I have told you the testable point. It is not the technical definition. It is how and where they are used.
@@Series7Guru Ok, thank you.
Had to laugh out loud with the attention attention 🤣🤣
A laugh out load moment or two in execution your Series 7 study plan is always a good thing. This is one of my favorite lectures. Series 7 exam target rich.
Do you have a government and agency underwritings video?
It is not very testable. I do have a video on GNMA and CMOs which is very testable
44:00