Arbitrage Bond

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August 25, 2024 3 min read Definitions
Arbitrage Bond: Municipal Bonds for Interest Rate Advantage
Finance Investments Arbitrage Bond Municipal Bonds Interest Rate Refund Bonds Treasuries
An arbitrage bond is issued by a municipality to gain an interest rate advantage by refunding higher-rate bonds before their call date. The proceeds from the lower-rate refunding issue are invested in higher-yielding treasuries until the first call date of the higher-rate issue being refunded.
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