In the City of Falmouth bonds example, which is the first interest payment date?

• A. October 1, 2027.
• B. March 1, 2028.
• C. April 1, 2027.
• D. April 1, 2028.

Answer: (D)

The concept tested is understanding when the first coupon payment occurs for a municipal bond with a regular semiannual coupon schedule. In many city bonds, interest is paid twice a year on fixed dates, commonly April 1 and October 1. If the bond is issued on October 1, 2027, the first interest payment doesn’t happen at issuance; it comes six months later on the next regular coupon date, which is April 1, 2028. Interest accrues from the issue date until that first payment date, so April 1, 2028 is the correct first payment date. The other dates don’t fit the standard coupon schedule: October 1, 2027 would be the issue date, March 1, 2028 isn’t a standard coupon date for this schedule, and April 1, 2027 would be before the bond was issued.