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When comparing a Variable Rate Demand Obligation (VRDO) to an Auction Rate Security (ARS), which statement is FALSE?
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5 votes
5 votes
When comparing a Variable Rate Demand Obligation (VRDO) to an Auction Rate Security (ARS), which statement is FALSE?

User Adrianvintu
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1 Answer

14 votes
14 votes

Answer:

Both have tender options.

Step-by-step explanation:

Variable rate demand obligation and Auction rate securities both are long term bonds which have interest rate that reset weekly or monthly. This advantages the issuer with lower short term rates despite of long term security. Both of these securities are subject to credit risk of the issuer and they are marketed by broker dealers.

User PeaceDealer
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