Series 7 Exam Question 300: Answer and Explanation

Question: 300

Where can an investor find the most information about a new municipal issue?

• A. In a prospectus
• B. In an official statement
• C. In a tombstone ad
• D. In a registration statement

Correct Answer: B

Explanation:

B. An official statement includes all relevant information about a new municipal bond. Municipal bonds don't have a prospectus, but an official statement is along the same lines. An official statement gives information about the municipal issue, such as the reason the bonds are being issued, what revenues are going to be used to pay the bonds, the issuer's payment history, and so forth. A tombstone ad is a brief advertisement that does not go into detail about the security being issued, and a registration statement is used by corporations when they are filing with the SEC.