Organizer: National Institute of Securities Markets (NISM)
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Quiz: Introduction to Municipal Finance
Municipal Bonds Course Session 1.6: Municipal Accounting & Audit Quiz: Introduction to Municipal Finance
Which of the following is responsible for determining revenue sharing between State Government and Local Governments?
State Finance Commission
Ministry of Finance
Central Finance Commission
RBI
ans. State Finance Commission
- Question
Which one of the following statements is true? Under accrual based accounting, income received is accounted irrespective of period it belongs to
All States have respective state manuals for Accounting, Budgeting and Audit
Income and Expenditure Statement shows ULB\\’s financial performance while Balance sheet shows ULB\\’s financial position
Ans. “Income and Expenditure Statement shows ULB’s financial performance while Balance sheet shows ULB’s financial position.” - Question
In order to meet capital expenditures which of the following sources do ULBs rely on the most? Tax revenue
Borrowings
User charges
Grants
ans. Grants - Question
What is the purpose of municipal budget? To determine how much debt a municipality can accrue
To estimate future investment returns
To set property tax rates for the next fiscal year
ans. To estimate future investment returns
Quiz: Basics of Municipal Bonds
Municipal Bonds Course Session 2.6: Economic and Social Impact of Municipal Bonds Quiz: Basics of Municipal Bonds
- Question
For an issuer eligible to raise muni bonds, there should not be default in debt servicing for the past 2 years
1 year
3 years
6 months
None of the above
ans. 1 year - Question
Debt obligation of revenue bonds is serviced through Revenue generated from underlying project
Tax proceeds of the Corporation
Fiscal transfer from Government
Borrowings from financial institutions
All of the above
ans. Revenue generated from underlying project - Question
A Special Purpose Vehicle can issue municipal bonds Yes
No
Yes, subject to undertaking responsibility under Section 243 W of Constitution of India
Ans. Yes, subject to undertaking responsibility under Section 243 W of Constitution of India - Question
What are the various types of bonds based on purpose Revenue bonds
Revenue and General Obligation bonds
Green bonds
General obligation bonds
a,c and d
ans. a,c and d - Question
An eligible issuer must have surplus in the following numbers of preeceding financial year 3 years
2 years
1 year
6 months
None of the above
ans. 2 years
Quiz: Regulatory Framework and Compliance
Municipal Bonds Course Session 3.4: MoHUA schemes including subsidy for issuers of municipal bonds Quiz: Regulatory Framework and Compliance
- Question
How many credit rating is required for issue of Municipal Bonds None
Atleast 2
Atleast 1
More than 2
ans. Atleast 1 - Question
Which among the following will be eligible to issue Municipal Bonds A municipal corporation which is allowed to raise funds under its constitutional documents;
A municipal corporation who defaulted in debt securities or loans in the last 200 days;
A municipal corporation who has the financial statements prepared not in the prescribed format
A municipal corporation which is not constituted under Article 243 of the Constitution of India.
ans. A municipal corporation which is allowed to raise funds under its constitutional documents - Question
What is a Municipal Bond: Equity Intrument;
Convertible Instrument;
Debt Instrument
Hybrid
ans. Debt Instrument
4. Question
Private Placement of Municipal Bonds are required to be listed within how many days from the closure of the issue
6
4
2
3
ans. 3
- Question
Which among the following is the key responsibility of SEBI: Establishing regulation governing the issuance of Municipal Bond
Drafting of the Disclosure Document
Listing the Municipal Bonds
Assigning Rating to the Municipal Bonds
ans. Establishing regulation governing the issuance of Municipal Bond
Quiz: Financial Reforms for Better Municipal Governance
Municipal Bonds Course Session 4.7: International examples of using financial information for improved governance Quiz: Financial Reforms for Better Municipal Governance
- Question
Which of the following is a key characteristic of an accrual-based accounting system? Revenue is recognized when cash is received
Expenses are recognized when cash is paid
Revenue and expenses are recognized when they are earned or incurred, regardless of when cash is received or paid
Only cash transactions are recorded
ans. Revenue and expenses are recognized when they are earned or incurred, regardless of when cash is received or paid - Question
In which year, NMAM was issued? 2012
2004
2008
2002
ans. 2004 - Question
Which of the following best describes the cash-based accounting system? Revenue is recognized when it is earned, regardless of cash receipt
Expenses are recognized when they are incurred, regardless of cash payment
Revenue and expenses are recognized only when cash is received or paid
Revenue is recognized when an invoice is issued
ans. Revenue and expenses are recognized only when cash is received or paid - Question
Under which accounting system, the assets and liabilities are recorded accurately? Cash based accounting system
Accrual based accounting system
Modified accounting system
None of the above
ans. Accrual based accounting system - Question
Which are not the sub-modules of Core Accounting module of Finance-integrated municipal e-Governance system? Budgeting
Revenue Accounting
Asset Accounting
Financial Management
ans. Financial Management
Quiz: Pre-issuance Process
Municipal Bonds Course Session 5.5: Sample documentation Quiz: Pre-issuance Process
- Question
Whose approval is not required for a municipal bond issue ? State Government
Stock Exchange
General Board
Standing Committee
RBI
ans. Stock Exchange - Question
Which of the following is not an example of allowed use of proceeds for a Green Bond Issue Solar
Renewable energy
Road construction
Sustainable waste management
Wind energy
ans. Road construction - Question
Which of the following intermediary is required only for a public issue and not private placement Consortium member
Merchant banker
Registrar
Trustee
Credit rating agencies
ans. Merchant banker - Question
What is the minimum issuer contribution required for a municipal bond issue 0.1499999999999999944488848768742172978818416595458984375
0.200000000000000011102230246251565404236316680908203125
0.25
0.299999999999999988897769753748434595763683319091796875
0.34999999999999997779553950749686919152736663818359375
ans. 0.25 - Question
How many intermediaries are required for a municipal bond issue 2
3
4
5
More than 5
ans. 3
Quiz: The Issuance Process
Municipal Bonds Course Session 6.4: Subscription Process, Allocation and Allotment Quiz: The Issuance Process
Quiz: The Issuance Process
- Question
Which of the following intermediary is required to give a Due Diligence certificate to SEBI Registrar
Merchant Banker
Issuer
Legal Counsel
Auditor
ans. Merchant Banker - Question
Which of the following factors is least important to determine amount of funds to be raised through municipal bonds Issuer financials
Tax collections
Project cost
Issuer contribution
Covenants
ans. Covenants - Question
After which of the following event, can the issue proceeds be transferred to the Issuer Listing of Bonds
Issue Closure
Allotment
Filing of Offer Document
SEBI approval
ans. Issue Closure - Question
Which of the following options is usually a part of the term sheet Black Shoe
Green Shoe
White Shoe
Blue Shoe
Red Shoe
ans. Green Shoe - Question
Which of the following is typically not a part of the term sheet Base Issue
Tenor
Security
covenants
Financials
ans. Financials
Quiz: Post-issuance Process
Municipal Bonds Course Session 7.4: Secondary market and trading Quiz: Post-issuance Process
- Question
Which of the following represents the correct workflow w.r.t municipal bonds? In-Principle Approval > Final Approval
–
ans. In-Principle Approval > Final Approval - Question
Which of the following are not required for seeking In-Principle approval from Stock Exchanges? Credit Rating Letter
Due Dilgence Certificate from the Debenture Trustee
Due Dilgence Certificate from the Merchant Banker
Placement Memorandum/Offer Document
ans. Placement Memorandum/Offer Document - Question
In how many days should privately placed municipal bonds be listed with stock exchange(s) from the date of closing of issue? 4
6
8
3
ans. 3 - Question
In how many days should publicly issued municipal bonds be listed with stock exchange(s) from the date of closing of issue? 7
6
8
9
ans. 6 - Question
Which of the following are not part of final listing requirements of privately placed municipal bonds? Debenture Trust Deed
Due Diligence Certificate from Debenture Trustee
Due Diligence Certificate from Lead Merchant Banker
Copies of all advertisements published in connection with the issue
ans. Copies of all advertisements published in connection with the issue
Quiz: Case Study of successful Issues in India
Municipal Bonds Course Session 8.8: Way Forward Quiz: Case Study of successful Issues in India
- Question
What percentage of investment in India are catered through Municipal Bonds? 10%
5%
3%
1%
ans. 1% - Question
What are the municipal bonds? Bond amongst ULB
Term Loan
Marketable Debt Securities
Grant to ULBs
ans. Marketable Debt Securities - Question
What are the types of municipal bonds? Revenue & General Obligations
Equity & Right
Preference & Non Preference
Revenue & Hybrid
ans. Revenue & General Obligations - Question
How many cities till March 2024 has issued Municipal Bonds? 10
17
20
12
ans. 10 - Question
Who can issue Municipal Bonds? Central Govt.
State Govt.
Public Sector Undertakings
Urban Local Bodies and Authorities
ans. Urban Local Bodies and Authorities
Quiz: Innovative Financing Strategies
Municipal Bonds Course Session 9.4: REITs and InvITs for Urban Projects Quiz: Innovative Financing Strategies
- Question
Tamil Nadu Water and Sanitation Pooled Fund is an example of which financing structure? Green Bonds
Social Impact Bonds
State-level pooled financing
Municipal Bonds
ans.State-level pooled financing - Question
Which of the following entities is NOT listed as a funding source for municipal corporations? HUDCO
World Bank
LIC
Tax revenues
ans. Tax revenues - Question
What is one of the key features required for the enforcement of security in municipal bonds? Establishing a dedicated state fund
Setting up a cash flow escrow mechanism
Reduction of municipal tax revenues
Privatization of public services
ans. Setting up a cash flow escrow mechanism - Question
The Pooled Finance Development Fund (PFDF) Scheme was introduced in which year? 1995
2006
2010
2015
ans. 2006 - Question
What is one of the main purposes of pooled financing schemes? To centralize municipal governance
To enhance creditworthiness of smaller projects
To privatize public utilities
To reduce federal loans to municipalities
ans. To enhance creditworthiness of smaller projects
Assessment Quiz: Municipal Bonds
Municipal Bonds Course Assessment Quiz: Municipal Bonds
- Question
Does the Tenor of Municipal Bonds are Fixed or Flexible for Bond issued? Both
Flexible
Fixed
None of the above
ans. Fixed - Question
Which of the following is NOT a project funded by Green Bonds? Sustainable waste management
Clean transportation
IT infrastructure development
Water recycling
ans. IT infrastructure development - Question
What is a Hybrid InvIT as described in the document? A combination of municipal bonds and green bonds
A mix of InvIT features and pooled financing across municipalities
A scheme targeting private investors only
A tax-exempt investment fund for public utilities
Ans. A mix of InvIT features and pooled financing across municipalities. - Question
Which of the following statements are not true?
(i) Only way to increase own revenue is to increase rates and tariffs
(ii) Million Plus ULBs are able to generate maximum share of national property tax collections
(iii) Levying flat rates for water charges does not have any impact on cost recovery (i) and (ii)
(ii) and (iii)
(i) and (iii)
All of the above
ans. (i) and (iii) - Question
What is one direct benefit experienced by early-adopting States and Urban Local Bodies (ULBs) from implementing financial reforms? Increased Financial Irregularities
Decreased Resource Allocation Efficiency
Enhanced Financial Management and Efficiency
Delayed Implementation of Technology Solutions
ans. Enhanced Financial Management and Efficiency - Question
Which of the following will denote issue of Municipal Bonds by way of private placement When the Municipal Bond is issued to the public at large;
When the Municipal Bond is issued upto a maximum of 200 person excluding QIBs;
When the Municipal Bond is issued only to 450 people wherein 200 are QIB investors;
When the Municipal Bond is not listed;
ans. When the Municipal Bond is issued upto a maximum of 200 person excluding QIBs; - Question
NMAM is applicable to? ULBs
Panchayats
Commercial Enterprises
None of the above
ans.ULBs - Question
Public issue is not allowed for a municipal bond issue true
false
ans. true - Question
ASBA process is mandatory for a public issue of municipal bonds true
false
ans. true - Question
Where is the municipal bond required to be listed for trading purposes With SEBI
With the Merchant Bankers
With the Credit Rating Agencies
With one of the recognised stock exchanges
ans. With one of the recognised stock exchanges - Question
Issuer must obtain credit rating for municipal bonds Mandatory from atleast 1 rating agency
Mandatory from 2 rating agencies
Descretionary
No specifications in the regulation
ans. Mandatory from 2 rating agencies - Question
Repayment of bond obligation by the issuer is mandatory Subject to availability of surplus funds
No
Yes
Only if repayment is sought by investors
none of the above
ans. yes - Question
Which of the following is not a source of revenue for ULBs?
i. Property tax
ii. User charges
iii. Parking fees
iv. Excise duty i & iii only
i & iv only
i, ii & iii only
All of the above
ans. i & iv only - Question
Municipal bonds needs to be listed on stock exchange in India No
Yes
Only if approved by Municipal Commissioner
Only if stipulated by investors
ans. yes - Question
Which of the following doesn\’t fall under the purview of Debenture Trustee? Monitor the minimum balances in escrow accounts
Creation of Security (in case of secured instruments)
Safeguard the interests of bondholders
Submit continuous disclosures to Stock Exchanges on behalf of the Issuers
ans. Submit continuous disclosures to Stock Exchanges on behalf of the Issuers - Question
Appointment of merchant banker is mandatory for municipal bond issues true
false
ans. true - Question
Retail investors can participate in private placement issue true
false
ans. false - Question
Which of the lifecycle stages for revenue enhancement deals with determination of tax/fee to be levied on user/property Assessment
Valuation
Enumeration
Reporting
ans. Valuation - Question
Which of the following is a party to the tripartite agreements with Issuer and depositories Escrow Bank
Merchant banker
Registrar
Trustee
Consortium member
ans. Trustee - Question
What is the mandatory cash flow distribution requirement for REITs and InvITs? 60% of cash flow
70% of cash flow
80% of cash flow
90% of cash flow
ans. 90% of cash flow - Question
Which one of the following statements is true? While ULBs have been devolved several functions, their powers to raise funds are limited
ULBs have been devolved funds, functions and functionaries as per 74th Constitutional Amendment Act
Budgeting and Financial Planning is the process to oversee and control expenditure on public infrastructure and services
States have fully implemented the 74th CAA
ans. While ULBs have been devolved several functions, their powers to raise funds are limited - Question
How does the integration of a Finance System in municipal e-Governance benefit financial transparency? By hiding financial records for security
By providing access to real-time financial data and reports
By eliminating all manual financial processes
By limiting access to financial data to select personnel
ans. By providing access to real-time financial data and reports - Question
What is a primary benefit of implementing e-governance systems in municipal administration? Increased Paperwork and Manual Processing
Improved Transparency and Real-Time Reporting
Reduced Accessibility to Public Services
Higher Costs Due to Technology Investment
ans. Improve - Question
Which of the following agreement is not required for a private placement of Municipal Bond Registrar agreement
Issue agreement
Debenture Trustee Agreement
Listing agreement
Consortium agreement
ans. Consortium agreement - Question
Compliance officer is not mandatory for municipal bond issue true
false
ans. False - Question
What is the minimum bidding period of Muni Bonds issued by way of public placements 6
3
2
4
ans. 3 - Question
For disclosure of financial statement which of the following is a regulatory requirement Previous year audited financial
Last 3 years unaudited financials
Last 3 years audited financials
None of the above
ans. Previous year audited financial - Question
Whether Listing of the Bond Issue is pre-requisite? As per Issuer’s Choice
Yes
On Investor’s Demand
No
ans. no - Question
What is the frequency of submitting financial results as part of continous disclosures? Annually
Half-yearly
Quarterly
Both a) and b)
ans. Both a) and b)
30 4. Question
Which is the first city to issue Municipal Bonds?
Ahmedabad
Bengaluru
Vadodara
Pune
ans. Ahmedabad