Prior to the maturity of a variable-rate demand obligation, an investor has the right to receive the:Current market valuePar valuePar value plus accrued interestPar value less accrued interest
Par value plus accrued interestA variable-rate demand obligation (VRDO) can be redeemed prior to maturity on any date the interest rate on the obligation is reset. Rates can be reset on a monthly, weekly, or daily basis. The obligation will be redeemed at par value plus accrued interest.
Prior to the maturity of a variable-rate demand obligation (VRDO), an investor has the right to receive the par value plus accrued interest.
A VRDO is a type of municipal bond that has a variable interest rate that is adjusted from time to time to reflect changes in the market conditions. The interest rate on VRDOs is typically reset every seven days or so.
The par value of a VRDO is the principal amount that the issuer promises to pay back to the investor at the maturity of the bond. Meanwhile, accrued interest is the interest that has accumulated on the bond since the last interest payment date.
Therefore, if the VRDO is sold before maturity, the investor has the right to receive the par value of the bond, which is the original amount they invested, plus the accrued interest that has accumulated up to that point. This is because the bond has not yet matured, which means that the issuer has not yet fulfilled its obligation to pay back the principal amount to the investor.
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