Series 7 practice questioneasyDebt Securities — Municipal Bonds — Official Statement
The disclosure document provided to investors in a new municipal bond offering is called:
- AA prospectus
- BAn official statement✓ Correct answer
- CA red herring
- DAn annual report
Explanation
Why B — An official statement
Municipal securities are exempt from SEC registration under the Securities Act of 1933, so they do not use a prospectus. Instead, the disclosure document for municipal bond offerings is called the official statement (OS). It provides information about the issuer, the project being financed, the security behind the bonds, and financial data. While not legally required, the MSRB requires dealers to provide official statements to customers.
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