Abondissued by a municipality totakeadvantage of a disparity in interest rates between two differentdebtinstruments. For example, a municipality issues anarbitragebond at a lowerinterest rateand for a shorter term than one of its own existing debtsecurities. It then might use theassetsraised by the arbitrageissueto buyTreasurysecurities that arepayinga higher interest rate than its own issue. Prior tomaturityof its own higher-rate issue, the municipality willsellthe Treasury securities andpay offthe debt on the arbitrage bond, profiting from the difference.

American Psychological Association (APA):arbitrage bond. . Retrieved July 12, 2019, from m website:

Chicago Manual of Style (CMS):arbitrage bond. InvestorGuide.com. WebFinance, Inc. (access:July 12, 2019).

Modern Language Association (MLA):arbitrage bond. InvestorGuide.com. WebFinance, Inc. July 12, 2019