Financial Industry Regulatory Authority (FINRA) Practice Exam 2025 - Free FINRA Practice Questions and Study Guide

The document that generally details the terms of a municipal bond offering is known as the official statement. This document is specifically prepared for the purpose of disclosing important information to prospective investors about the bond issue. It includes details such as the financial health of the issuing municipality, the project being funded, the terms of the bond, the risks involved, and how the funds will be used.

An official statement serves as a key source of information to help investors make informed decisions. It is often compared to a prospectus used in non-municipal securities, as both aim to provide transparency and necessary details to potential investors. However, the official statement is unique to municipal securities and adheres to the specific regulations established by the Municipal Securities Rulemaking Board (MSRB).

The other options, while relevant in different contexts, do not serve the same purpose for municipal bond offerings. An offering circular is generally associated with certain types of securities offerings but is not specific to municipal bonds. A private placement memorandum is used for private placements of securities, detailing information to a limited number of sophisticated investors, and does not apply to public municipal bond offerings. A prospectus, although related, usually pertains to corporate securities and is not the primary document for municipal bonds.