A variable rate demand bond (VRDB):
I. Is a long-term security
II. Has interest payments linked to the level of short-term interest rates
III. May periodically be sold back to the issuer at face value
IV. Is tax-exempt

Question

Quizplus · Accepted Answer

A variable rate demand bond (VRDB) is a long-term security (I) with interest payments linked to short-term interest rates (II). It can be sold back to the issuer at face value periodically (III) and is often tax-exempt (IV).

A Variable Rate Demand Bond (VRDB)