Abstract
This paper examines the impact of private municipal bond insurance on the interest costs of local government bonds. Based on the examination of True Interest Costs of both guaranteed and non-guaranteed municipal bonds over a three year period, results indicate that, on average, the interest costs of guaranteed bonds are significantly less than costs estimated for bonds without such protection. Investors in insured municipal bonds seem to demand a greater risk premium for the insurance coverage as the underlying credit rating of the issue rises.
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The Journal of Risk and Insurance publishes rigorous, original research in insurance economics and risk management. This includes the following areas of specialization: (1) industrial organization of insurance markets; (2) management of risks in the private and public sectors; (3) insurance finance, financial pricing, financial management; (4) economics of employee benefits, pension plans, and social insurance; (5) utility theory, demand for insurance, moral hazard, and adverse selection; (6) insurance regulation; (7) actuarial and statistical methodology; and (8) economics of insurance institutions. Both theoretical and empirical submissions are encouraged. Empirical work should provide tests of hypotheses based on sound theoretical foundations. JSTOR provides a digital archive of the print version of The Journal of Risk and Insurance. The electronic version of The Journal of Risk and Insurance is available at //www.blackwell-synergy.com/servlet/useragent?func=showIssues&code;=jori. Authorized users may be able to access the full text articles at this site.
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The American Risk and Insurance Association (ARIA) is a worldwide group of academic, professional, and regulatory leaders in insurance, risk management, and related areas, joined together to advance the study and understanding of the field. Founded in 1932, ARIA emphasizes research relevant to the operational concerns and functions of insurance and risk management professionals and provides resources, information, and support on important insurance and risk management issues. Two main goals of the organization are 1) to expand and improve academic instruction of risk management and insurance, and, 2) to encourage research on all significant aspects of risk management and insurance.
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This is the municipal securities industry's equivalent of the corporate prospectus.
Discloses any material information an investor might need about an isue.
Typically includes: the offering terms, the summary statement, the purpose of the issue, the authorization of bonds, description of bonds, description of issuer, including organization and management, area economy, and a financial summary, the construction program, the feasibility statement, any regulator matters, any specific provisions of the indenture or resolution, any accompanying legal proceedings, tax status, any appropriate appendices, any credit enhancements.
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