Glossary of Municipal Securities Terms
Second Edition (January 2004)
QUALIFIED BID – A bid in the secondary market entered to purchase bonds subject to conditions set forth by either party to the transaction. For example, the purchaser might stipulate that a legal opinion acceptable to it must be available on the security or that the bid is only valid if the seller can guarantee delivery by a certain date; similarly, the seller might impose certain requirements. Compare: BID.
QUALIFIED BOND – A private activity bond that meets certain requirements under the Internal Revenue Code in order for the interest thereon to be excluded from gross income for federal income tax purposes. Also sometimes referred to as a “qualified private activity bond.” See: PRIVATE ACTIVITY BOND.
QUALIFIED HIGHER EDUCATION EXPENSES – Certain costs of higher education specified in Section 529 of the Internal Revenue Code for which investments in 529 plans may be applied on a tax-advantaged basis. See: 529 PLAN.
QUALIFIED INSTITUTIONAL BUYER (QIB) – An entity to whom a security otherwise required to be registered under the Securities Act of 1933 may be sold without such registration under SEC Rule 144A. In general, a QIB must own and invest on a discretionary basis at least $100 million in securities and must be an insurance company, investment company, employee benefit plan, trust fund, business development company, 501(c)(3) organization, corporation (other than a bank with net worth less than $25 million), partnership, business trust or investment adviser. Compare: ACCREDITED INVESTOR; SOPHISTICATED INVESTOR; SOPHISTICATED MUNICIPAL MARKET PROFESSIONAL. See: INVESTOR LETTER.
QUALIFIED LEGAL OPINION – A legal opinion of bond counsel, sometimes referred to as a “reasoned opinion,” that is conditional or otherwise subject to qualifications. A legal opinion generally is not considered to be qualified if it is subject to customary assumptions, limitations and qualifications or if the opinion is otherwise explained. In the municipal securities market, legal opinions have traditionally been unqualified. Compare: UNQUALIFIED LEGAL OPINION. See: LEGAL OPINION.
QUALIFIED ZONE ACADEMY BONDS (QZAB) – Municipal securities issued to finance projects for certain eligible public schools in conjunction with private business contributions. In lieu of receiving periodic interest payments from the issuer, an eligible holder of a qualified zone academy bond is allowed annual federal income tax credits while the bond is outstanding.
QUOTATION – Any bid for, or offer of, municipal securities, or any requests for bids for, or offers of, municipal securities, including indications of bid wanted or offer wanted. Compare: NOMINAL QUOTATION; WORKABLE.