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Portfolio - A portfolio in which the same
quantity of bonds mature each year over a specified time period
or maturity range.
Legal Opinion - A
written statement by recognized counsel affirming the legal
validity of a municipal bond; it must either be printed on or
attached to the bond.
Credit - A security document usually issued
by a bank that backstops, or enhances, the basic security
backing the bond.
Bond - A bond secured by a bank letter of
credit obligating the issuing bank to pay sums at such times as
are required to permit the retirement of the bond.
Lien - A
creditor's claim against property. A junior lien is a lien that
is outranked by another lien. A senior lien is an interest in
property having priority over other interests as to payment,
not necessarily an interest which has existed longer than
Mandatory Redemption - The
requirement that the issuer call outstanding bonds based on a
predetermined schedule or as provided in the bond contract.
Mandatory Sinking Fund - A
requirement to redeem a fixed portion of term bonds, which may
comprise the entire issue, in accordance with a fixed schedule.
Although the principal amount of the bonds to be redeemed is
fixed, the specific bonds called to satisfy the requirement are
selected by the trustee on a lot basis.
Maturity - (or Maturity
Date) The date on which the principal of a municipal security
becomes due and payable to the security holder.
Maturity Date - The stated
date on which all or a stated portion of the principal amount
of a security is due and payable.
Moral Obligation Bond - A
type of municipal security, issued by a state agency, that is
not backed by the full faith and credit of a state. State law
may provide that the agency request an appropriation from the
legislature to replenish the issuer's debt service reserve fund
if a shortfall occurs.