| Arbitrage Bond | |
 A lower-rate debt security issued by a municipality prior to the call date of the municipality's existing higher-rate security. |
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 Proceeds from the issuance of lower-rate bonds are invested in treasuries until the call date of the higher-interest bonds. This strategy is used by municipalities when they wish to gain an interest-rate advantage. As long as the proceeds from net sales and investments are to be used in future projects, the bonds will qualify for a temporary tax exemption. If, however, the project experiences a significant delay or cancellation, the municipality may be taxed. Some conflicts in federal regulations can be avoided by using a ZEBRA agreement. |
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 Advanced Bond Concepts - This detailed tutorial explains some of the more complex concepts and calculations you need to know for trading bonds, including bond pricing, yield, term structure of interest rates, duration, and much more. Bond Basics Tutorial - What are bonds and do they belong in your portfolio? Get all the answers in this comprehensive tutorial. Trading the Odds with Arbitrage - Profiting from arbitrage is not only for market makers--retail traders can find opportunity in risk arbitrage. |
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