An auction rate security (ARS) is a debt instrument with a variable interest rate that is reset at periodic intervals through a dutch auction.
The interest rate on an ARS is determined by the interaction of supply and demand in the auction. Investors looking to purchase an ARS submit bids at various interest rates, with the lowest bid accepted determining the interest rate for all securities sold in that auction.
Auction rate securities were popular in the early 2000s as a way to invest in debt instruments with rates that were lower than traditional fixed-rate bonds, but higher than rates on short-term debt instruments such as Treasury bills.
However, the auction rate market froze up in the aftermath of the financial crisis, and many investors were left holding securities with interest rates that were much higher than they had anticipated.
What does ARS mean in banking? ARS is an abbreviation for "adjusted rate spread." The adjusted rate spread is the difference between the annual percentage rate (APR) charged on a loan and the yield on a comparable Treasury security. Lenders use the adjusted rate spread to help price adjustable-rate mortgages (ARMs).
Which security is most subject to reinvestment risk?
The security that is most subject to reinvestment risk is the security with the longest maturity. This is because the longer the maturity, the longer the period over which interest payments are made, and the greater the chance that interest rates will rise during that period. What happens when shares go into auction? When a share goes into auction, it means that the stock will be traded in an auction format instead of the traditional bid-ask format. In an auction, the highest bidder will get the shares, while the lowest bidder will sell the shares. The price of the shares will be determined by the highest and lowest bid.
What are the three major airline ticketing systems?
There are three major airline ticketing systems: Sabre, Amadeus, and Galileo.
Sabre is a computer reservation system used by travel agencies and airlines. It was created in 1960.
Amadeus is a global distribution system used by travel agencies and airlines. It was created in 1987.
Galileo is a computer reservation system used by travel agencies and airlines. It was created in 1987.
Which Treasury security is not sold on a regular auction schedule?
The answer to this question is that there is no one specific Treasury security that is not sold on a regular auction schedule. Instead, the Treasury Department periodically announces when it will hold auctions for specific types of securities, and these auctions are not held on a regular schedule. For example, the Treasury may announce that it will hold an auction for 3-year Treasury notes on a particular date, and then hold another auction for 5-year Treasury notes on a different date.