In pricing conventions, what should be disclosed about pricing?

• A. Pricing practices should be transparent and consistent, and any special factors affecting price disclosed.
• B. Pricing must be kept opaque to preserve competitive advantage.
• C. Pricing must only reflect issuer credit rating.
• D. Pricing is discretionary and need not disclose factors.

Answer: (C)

Pricing should be transparent and applied consistently, with any factors that could affect the price clearly disclosed. In municipal securities, the price isn’t based on a single factor like issuer credit alone; liquidity, market conditions, call features, maturity, and other transaction specifics all shape the final price. Disclosing these elements helps investors understand how the price was determined and ensures fair dealing. Keeping pricing opaque, relying only on one factor, or treating pricing as purely discretionary without disclosure would undermine investor protection and the fairness standards that govern pricing conventions.