Series 63 practice questionhardcomplex - loss of exemption
A county issues industrial revenue bonds for a private, for-profit sports franchise, and payments on the bonds are derived from the franchise. Under the USA, the bonds are:
- ANot automatically exempt under the governmental-securities exemption because payments are derived from a private commercial enterprise✓ Correct answer
- BAutomatically exempt because a county is the nominal issuer
- CExempt only after the Administrator retroactively revokes and restores the exemption
- DOutside the antifraud provisions because they are municipal bonds
Explanation
Why A — Not automatically exempt under the governmental-securities exemption because payments are derived from a private commercial enterprise
The USA governmental-securities exemption generally excludes an industrial revenue obligation when payments are derived from a nongovernmental industrial or commercial enterprise, unless another exemption applies. Antifraud provisions still apply.
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