Which statement about Bond Anticipation Notes maturity is incorrect?

Which statement about Bond Anticipation Notes maturity is incorrect?

• A. True
• B. Not specified
• C. False; the due date uses the fifth month
• D. False; the due date uses the last day of the fifth fiscal year

Answer: (C)

Bond Anticipation Notes are short-term debt issued to bridge financing until bond proceeds are available to refinance. Because they are intended to be repaid or refinanced quickly, their maturity is limited to up to one year from issue, and the exact due date is set to align with when the bonds are expected to be issued, not with a fixed calendar pattern. The statement claiming the due date uses the fifth month is not correct because there is no rule that BAN maturities must fall on a specific calendar month. Likewise, tying a due date to the last day of the fifth fiscal year would exceed the typical short-term nature of BANs. So the idea that the due date is determined by a fixed fifth-month or five-year-fiscal-year rule is inaccurate; BANs are generally structured to mature within one year and to be settled when the anticipated bond issue occurs.

Bond Anticipation Notes are short-term debt issued to bridge financing until bond proceeds are available to refinance. Because they are intended to be repaid or refinanced quickly, their maturity is limited to up to one year from issue, and the exact due date is set to align with when the bonds are expected to be issued, not with a fixed calendar pattern.

The statement claiming the due date uses the fifth month is not correct because there is no rule that BAN maturities must fall on a specific calendar month. Likewise, tying a due date to the last day of the fifth fiscal year would exceed the typical short-term nature of BANs. So the idea that the due date is determined by a fixed fifth-month or five-year-fiscal-year rule is inaccurate; BANs are generally structured to mature within one year and to be settled when the anticipated bond issue occurs.