A:

a. They tend to follow trends set by municipal bond futures.

b.
They are traded in points and 32nds of par.



c. For every basis point increase, the bond's price declines $25.



d. On notice-of-intention day, the short acquires the bonds and delivers them to the long in return for payment.



Answer: B



Muni bonds tend to follow T-bonds, not vice versa. C relates to T-bills, not T-bonds; and D confuses delivery day with notice-of-intention day. Chapter 4: Market Operations



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