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

A Municipal Variable Rate Demand Bond (VRDB)