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Variable Rated Demand Bond |
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Variable rated demand bond (VRDB) Floating-rate bond that periodically can be sold back to the issuer. Variable Rated Demand Bond A debt security with variable interest rates that accumulate and are payable on demand of the bondholder. The interest rate is usually based on the prevailing money market rate. Issuing a variable rated demand bond means that the issuer ought to have enough cash on hand to repay the bond; however, the bondholder has an incentive not to demand payment without cause, as he/she will no longer receive coupon payments. The variable interest rate means that the coupons change over time, usually according to variations in the prevailing money market rate plus or minus a certain percentage. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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