auction-rate security

auction-rate security definition - business

auction-rate security

A type of floating-rate security for which interest or dividend payments are determined at periodic auctions conducted by the issuer rather than by short-term interest rates. A potential risk is that a lack of bidding may keep investors from being able to cash out. Compare remarketed preferred stock.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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