Pricing, Yields and Accrued Interest
This topic covers dollar price, basis, coupon, current yield, yield to maturity, yield to call, dollar value of points, fractions, premium amortization, OID accretion, and flat bonds.
How to study for Series 52
Treat each Series 52 item as a municipal securities workflow: identify the security, calculate or interpret yield, disclose material risks, and apply MSRB conduct rules.
Core concepts
Concept 1
Pricing, Yields and Accrued Interest questions test whether a municipal securities representative can identify the product feature, market driver, customer impact, or regulatory duty in the scenario.
Exam cue: Identify whether the item tests municipal securities, economic and rate behavior, or securities laws and regulations.
Concept 2
The best Series 52 answer usually connects municipal bond structure, yield, tax treatment, disclosure, and MSRB conduct rules.
Exam cue: Match the answer to the feature: source of payment, credit risk, yield, price, call, tax, disclosure, customer type, or MSRB rule.
Concept 3
Eliminate answers that confuse GO and revenue bonds, ignore interest-rate behavior, omit time-of-trade disclosure, or treat municipal securities as if all risks are identical.
Exam cue: Prefer fair dealing, complete disclosure, accurate calculations, and customer-specific municipal bond risk analysis.
Risk pitfalls and guardrails
Assuming tax exemption removes credit, liquidity, market, call, or reinvestment risk.
Guardrail: Avoid answers that treat tax exemption as risk-free, ignore rate direction, omit time-of-trade disclosure, or recommend without customer-specific facts.
Calculating yield or accrued interest without checking coupon, settlement, premium, discount, and call assumptions.
Guardrail: Avoid answers that treat tax exemption as risk-free, ignore rate direction, omit time-of-trade disclosure, or recommend without customer-specific facts.
Forgetting that municipal representatives communicate with investors under MSRB and federal securities law standards.
Guardrail: Avoid answers that treat tax exemption as risk-free, ignore rate direction, omit time-of-trade disclosure, or recommend without customer-specific facts.
Memory anchors
Dollar Price
Dollar price states the bond price as a percentage of par.
Basis
Basis commonly refers to yield when quoting municipal bonds.
Current Yield
Current yield equals annual interest divided by market price.
Yield to Maturity
Yield to maturity estimates return if the bond is held to maturity.
Yield to Call
Yield to call estimates return if the bond is redeemed on a call date.
Dollar Value of Point
For a $1,000 bond, one point equals ten dollars.
Accrued Interest
Accrued interest is calculated from the last interest payment date to settlement.
Premium Amortization
Premium amortization reduces the tax basis of a premium bond over time.
OID Accretion
Original issue discount accretion increases basis over time.
Flat Bond
A flat bond trades without accrued interest, often because interest is in default.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
A bond with a 5 percent coupon is purchased at 95. What is the current yield?
A bond with a 4 percent coupon trades at 105. What is the approximate current yield?
Answer all questions to submit.
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Move forward only after this module is stable.
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