A long-term bond with interest rates reset through periodic auctions.
Description
Auction rate securities (ARS) are debt instruments, often municipal bonds, with rates adjusted via Dutch auctions, typically every 7 to 35 days. Family offices may use ARS for liquidity and yield, but auctions can fail, locking investments. Post-2008, their risks—illiquidity and market freezes—reduced popularity. They require careful risk assessment.
