VARIABLE-RATE BONDS

Variable-Rate Bonds

Variable-Rate Bonds

VRDOs are variable rate securities that generally reset on a periodic basis, usually weekly or daily. While VRDOs generally have long final maturities, often as long as thirty years, they are considered short-term securities because they include a tender provision known as a put feature whereby the investor has the option to sell back the security at each periodic yield reset. An investor purchases a VRDO at par, and when the security is put back to the issuer, he/she receives par plus the accrued interest earned up to that point in time. VRDOs are also often referred to ...