Series 50: Temporary Periods

Taken from our Series 50 Online Guide

Temporary Periods

When a bond is first issued, the IRS provides, under certain circumstances, for an initial temporary period during which yield restrictions do not apply. This means that an issuer may invest bond proceeds in higher yielding investments for a “reasonable temporary period” until the proceeds are needed for the project without causing the bonds to be arbitrage bonds.

If the proceeds of the bond are to be spent on capital projects, then the temporary

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