Products & Their RisksQuestion 163 of 398
Municipal notes such as TANs, RANs, and BANs are used primarily to:
a.Provide short-term interim financing until longer-term revenue or funds arrive
b.Offer 30-year permanent financing for infrastructure
c.Convert into common stock of the municipality
d.Provide a federally guaranteed retirement benefit
Explanation
Municipal anticipation notes are short-term instruments that bridge timing gaps in a municipality's cash flow. A TAN is repaid from anticipated taxes, a RAN from anticipated revenues, and a BAN from the proceeds of a future long-term bond issue. They mature in a relatively short time and are used for interim, not permanent, financing.
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