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Simple English definitions for legal terms

Investor Protection Guide: Auction Rate Securities

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A quick definition of Investor Protection Guide: Auction Rate Securities:

Auction rate securities (ARS) are investments that promise a high yield, similar to a certificate of deposit (CD) or money market fund. However, they are actually long-term variable rate debt with interest payments determined through auctions. This means that when interest rates rise, so does the risk and volatility of the investment. In 2008, the auction market for ARS collapsed, leaving investors unable to sell their securities. The ARS market is now mostly inactive. It is important for investors to understand the risks associated with ARS before investing.

For more information, visit the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) websites.

A more thorough explanation:

Auction rate securities (ARS) are investments that were marketed as safe and high-yielding alternatives to CDs or money market funds. They are debt or preferred equity securities that have their interest rates reset periodically through auctions. These securities have long-term maturities or are issued in perpetuity.

ARS were promoted as safe investments with easy access to funds. However, they are typically long-term variable rate debt with interest payments determined on a 7, 28, or 35-day basis. When interest rates rise, the interest expenses and volatility of ARS also rise, making them a higher-risk investment than fixed-rate debt.

The auction market for ARS collapsed in February 2008, leaving investors unable to liquidate their investments. The ARS market is now generally defunct.

An example of an ARS investment would be a bond issued by a municipality or corporation that has its interest rate reset through an auction every 28 days. Another example would be a preferred stock that pays a dividend that is reset through an auction every 35 days.

These examples illustrate how ARS investments work. The interest rate or dividend payment is not fixed, but rather determined through an auction process. This means that the return on investment can vary and may be higher or lower than expected.

Investor Protection Guide: Affinity Fraud | Investor Protection Guide: Equity-Indexed Annuities

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texaslawhopefully
15:42
not sure about for liberals
cumsock
15:43
They’re very similar tho
cumsock
15:43
Both t6 ivies
Is that NYU disrespect???? NYU out the t-6?
15:44
Penn because my college friends who mentored me go there
lilypadfrog
15:45
NYU is a t6 unless they don’t accept me and then idgaf what they’re ranked
texaslawhopefully
15:46
That's the best mentality
texaslawhopefully
15:46
If I get into UChicago it will be CYS
lilypadfrog
15:48
waspy I’m sure he meant to clarify that CYS is Cornell Yale Stanford
yeah just making sure
I look really good in blue tho
obviously cornell is t3
cumsock
15:49
someone from my undergrad is going to columbia for a masters in social work and the way they are talking to me im pretty sure they think thats as hard to get accepted to as columbia law
every prof at cornell glazes it so hard
GreyCeaselessMammoth
15:50
i know so many heads going to various schools for random masters degrees and its like babe its not the sameeee
cumsock
15:50
"The acceptance rate for the Master of Science in Social Work (MSW) program at Columbia University is 74%" does he know?
15:50
@cumsock: some battles are won by avoiding fighting them
cumsock
15:51
im not i just wish normies knew its not the same
Trismegistus
15:51
i need chicago so badly
15:51
for suresies
lilypadfrog
15:52
llama do you think we’re besties? I kinda think we’re besties
JumpySubsequentDolphin
15:52
@GreyCeaselessMammoth: PLS I know a girl who got a master’s at Columbia for some random niche thing and she told EVERYBODY SHES GOING TO COLUMBIA LAW SCHOOL
GreyCeaselessMammoth
15:52
WHAT???
15:53
@JumpySubsequentDolphin: I can respect the hustle.
GreyCeaselessMammoth
15:53
penn r
GreyCeaselessMammoth
15:53
called it
15:53
i have two old classmates going to columbia for like social work
15:53
@lilypadfrog: that depends. flash ur mod badge to find out
soyalmondoatmilk
15:54
penn R too bruh
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