Explanation of the Indexes

The Municipal Bond Index

The Bond Buyer Municipal Bond Index is a daily price index based on 40 long-term municipal bonds. The index's value is expressed in points and 32ds. The figures shown are weekly averages of the index's daily figures for each week ending Thursday.

The index contains 40 long-term municipal bonds. Taxable bonds, variable-rate bonds, and private placements are excluded, but bonds subject to the alternative minimum tax and fixed-rate remarketings can be included. The index is based on price quotations provided by Standard & Poor's Securities Evaluations. It is calculated every business day using prices as of 4 p.m. Eastern time.

The index's value is calculated by taking the dollar bid price for each bond, converting it to represent what the price would be if the bond had a standard 6% coupon rate, averaging the converted prices, and multiplying the result by the current value of the coefficient. The coefficient compensates for the changes made twice a month in the composition of the index.

The average yield to par call is calculated using the average coupon rate, average par call date, and average dollar price. The average yield to maturity is calculated using the average maturity date.

The Weekly Bond Indexes

The three weekly bond indexes are calculated every Thursday (or Wednesday if Thursday or Friday is a legal holiday). They represent theoretical yields rather than actual price or yield quotations. Municipal bond dealers and banks are asked to estimate what a current-coupon bond for each issuer would yield if the bond was sold at par value. The indexes are simple averages of the average estimated yields of the bonds.

The 20-Bond Index consists of 20 general obligation bonds that mature in 20 years. The average rating of the 20 bonds is roughly equivalent to Moody's Investors Service's Aa2 and Standard & Poor's Corp.'s AA. (No average Fitch rating is provided because Fitch does not rate all of the bonds in the index.)

The 11-Bond Index uses a select group of 11 bonds in the 20-Bond Index. The average rating of the 11 bonds is roughly equivalent to Moody's Aa1 rating and S&P's AA-plus. (No average Fitch rating is provided.)

The bonds currently used in the two indexes are listed below. The bonds in the 11-Bond Index are marked with an asterisk.

Moody's/S&P/Fitch Moody's/S&P/Fitch Moody's/S&P/Fitch

Baltimore, Md. A1 / A+ / A+ Houston, Tex. Aa3 / AA- / AA- *Pennsylvania Aa2 / AA / AA

California A1 / A+ / A+ *Memphis, Tenn. Aa2 / AA / AA- *Phoenix, Ariz. Aa1 / AA+ / NR

Chicago, Ill Aa3 / A+ / AA- Milwaukee, Wis. Aa2 / AA / AA+ Puerto Rico Baa3 / BBB / NR

Dade Co., Fla. Aa3 / AA- / A+ *New Jersey Aa2 / AA / AA- *Seattle, Wash. Aaa / AAA / AAA

*Denver, Colo. Aa1 / AA+ / AA+ New York City A1 / AA- / A+ *South Carolina Aaa / AA+ / AAA

*Florida Aa1 / AAA / AA+ New York State Aa3 / AA / AA- *Washington Aa1 / AA+ / AA

*Georgia Aaa / AAA / AAA *North Carolina Aa1 / AAA / AAA

The Revenue Bond Index

The Revenue Bond Index consists of 25 various revenue bonds that mature in 30 years. The average rating is roughly equivalent to Moody's A1 and S&P's A-plus. (No average Fitch rating is provided because Fitch does not rate all the bonds in the index.) The bonds currently used in the index and their ratings are listed below.

Moody's S&P Fitch

Atlanta, Ga., airport (AMT) A1 A+ A+

California Housing Finance Agency, multi-unit rental (AMT) Aa2 A+ NR

Connecticut Housing Finance Authority Aaa AAA NR

Dallas-Fort Worth International Airport Board, Tex. (AMT) A1 A+ A+

Energy Northwest (formerly WPPSS), Wash., power revenue Aa1 AA- AA-

Illinois Health Facilities Authority (Northwestern Memorial Hospital) Aa2 AA+ NR

Illinois Housing Development Authority, multifamily A1 A+ A+

Intermountain Power Agency, Utah A1 A+ AA-

JEA (formerly Jacksonville Electric Authority), Fla. electric revenue Aa2 AA AA

Kentucky Turnpike Authority Aa3 AA- AA-

Los Angeles Department of Water and Power, Calif., electric revenue Aa3 A+ AA-

Maricopa Co. Industrial Development Authority, Ariz. (Samaritan Health Service) Baa1 BBB NR

Massachusetts Port Authority (AMT) Aa3 AA- AA-

MEAG Power (formerly Municipal Electric Authority of Georgia) A2 AA-

Nebraska Public Power District, power supply A1 A+ A+

New Jersey Turnpike Authority, turnpike revenue A3 A A

New York State Local Government Assistance Corp., revenue A3 AA- A+

New York State Power Authority, general purpose Aa2 AA- AA

North Carolina Municipal Power Agency No. 1, Catawba electric revenue Baa1 BBB+ A-

Port Authority of New York and New Jersey, consolidated (AMT) A1 AA- AA-

Puerto Rico Electric Power Authority Baa1 A- NR

Salt River Project Agricultural Improvement and Power District, Ariz., electric revenue Aa2 AA NR

South Carolina Public Service Authority, electric revenue Aa2 AA- AA

Texas Municipal Power Agency A2 A+ A

Virginia Housing Development Authority (AMT) Aa1 AA+ NR

Short-Term Indexes

The Bond Buyer One-Year Note Index is calculated once a week on Wednesday (Tuesday if Wednesday is a legal holiday). It represents theoretical yields rather than actual price or yield quotations. The index is a simple average of the average estimated yields of the notes.

Ten note issuers are used: California, Colorado, Idaho, Los Angeles County, Michigan, New Jersey, New York City (RANs), Pennsylvania, Texas, and Wisconsin. All issues are rated MIG-1 by Moody's Investors Service. California, Michigan, and New York City are rated SP-1 by Standard & Poor's Corp., while all other issuers are rated SP-1-plus.

U.S. Treasury 10-Year Note and 30-Year Bond

The U.S. Treasury 10-year note and 30-year bond yields are the quotes appearing at 3:30 p.m. Eastern time on Moneyline Telerate's Webstation. (c) 2006 The Bond Buyer and SourceMedia, Inc. All rights reserved. http://www.bondbuyer.com http://www.sourcemedia.com