Final answer:
Of the options provided, AMBAC, MBIAC, and FGIC insure municipal bonds, while SIPC does not. SIPC provides protection against the loss of cash and securities in broker-dealer bankruptcies, not bond insurance.
Step-by-step explanation:
The question asks which one of the listed entities does not insure municipal bonds. Among the options given - AMBAC, MBIAC, FGIC, and SIPC - three are insurers of municipal bonds. These companies provide insurance policies that guarantee the repayment of the principal and interest of municipal bonds in case the issuer defaults.
AMBAC (Ambac Assurance Corporation), MBIAC (Municipal Bond Insurance Association), and FGIC (Financial Guaranty Insurance Company) are all involved in this market. However, the SIPC (Securities Investor Protection Corporation) does not insure municipal bonds; instead, it protects customers of its member broker-dealers against the loss of cash and securities in the case of a broker-dealer's bankruptcy.
In terms of the broader context provided and related terms, the capital market refers to the financial markets where long-term debt or equity-backed securities are bought and sold.
Entities like AMBAC, MBIAC, and FGIC contribute to the stability of this market, especially when it comes to instruments like government savings bonds and other municipal bonds. However, the SIPC plays a role in markets dealing with other instruments such as Money Market Mutual Funds, Small CDs, and more.