BHAC (Berkshire Hathaway Assurance Corporation):

Berkshire Hathaway Assurance Corp. (BHAC) was created in December 2007 by Warren Buffett, CEO of Berkshire Hathaway, Inc. as an insurer for municipal bonds. BHAC is rated Aa1 by Moody’s and AAA by S&P.

Bid:

The price the client will receive when they sell.

Book-Entry Form:

When a security is purchased in book-entry form, the client receives a confirmation of the purchase. The client will also receive a periodic account statement indicating his/her holdings, interest, principal payments, or any other activity. This is similar to banks, which now use bank statements and at one time might have used a passbook system. Book-entry relieves a client of the risk, expense, and bother of safekeeping their securities. The client does not need to worry about missing a call notice, and they are no longer exposed to the inconvenience of replacing lost or stolen certificates.

Bond:

The contract between the borrower (the municipal issuer) and the lender (the investing public). The promise to repay the monies borrowed.

Bond Ratings:

In the purest sense, the credit analysis of a General Obligation bond centers on two issues: (1) the municipality’s willingness to pay and (2) its willingness to pay its debts in a timely manner. The two main ratings companies for municipal bonds are Moody’s and S&P. The basic difference between the ways that the two ratings companies analyze bonds is that, while Moody’s concentrates on debt burdens and debt ratios, S&P focuses on the socioeconomic base of a community (e.g. per capita growth trends, total personal income). Moody’s ratings are in parenthesis.

• AAA (Aaa) — The highest rating assigned by Moody’s and S&P. Capacity to pay interest and repay principal is extremely strong.

• AA (Aa) — Debt has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.

• A — Debt rated “A” has a strong capacity to pay interest and repay principal, although it is somewhat more susceptible to the adverse affects of changes in circumstances and economic conditions than debt in higher-rated categories.

• BBB (Baa) — Debt is regarded as having an adequate capacity to pay interest and repay principal. These ratings by Moody’s and S&P are the “cut-off” for a bond to be considered investment grade. Whereas debt normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal in this category than in higher-rated categories.

• BB (Bb), B, CCC (Ccc), CC (Cc), C — Debt rated in these categories is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. “BB” indicates the least degree of speculation and “C” the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or market exposure to adverse conditions and are not considered to be of investment grade.

• D — Debt rated “D” is in payment default. This rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period.

Bond Resolution:

The legal authorization on the part of a municipal entity to issue bonds. The resolution sets out the terms and conditions of the bond issue including such items as the legal ability to issue bonds, the type of bond, the pledge and any other legal covenants necessary and required for the legal issuance of the bond.

Bond Service:

Another term for debt service. See Debt Service for definition.

Call Features:

(See also Redemption Provisions.) The ability of a municipal issuer to partially or totally repay a bond issue before its stated maturity.