Glossary of Municipal Securities Terms


A colloquial term for a variable rate demand obligation. The put option feature of the obligation has the practical effect of making the securities short-term from the perspective of the investor; the variable interest rate on the securities, therefore, tends to fluctuate in the “lower” range of interest rates appropriate for short-term securities. See: FLOATER; INVERSE FLOATER; TENDER OPTION BOND; VARIABLE RATE; VARIABLE RATE DEMAND OBLIGATION.

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