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<br />Impact <br /> <br />Enactment of such legislation would allow the public to achieve a market <br />or near-market rate of return on its funds while minimizing the potential <br />for capital losses arising from market changes or issuer default. The <br />legislation, in addition, will provide an effective option for meeting <br />the arbitrage, rebate requirements of the Tax Refonn Act of 1986. <br /> <br />* Money market funds are particularly required in order to take advantage <br />of one of the exceptions to the arbitrage rebate requirements of the <br />Tax Refonn Act of 1986. Investment of bond proceeds in tax-exempt <br />securities releases the issuer from the arbitrage rebate calculation. <br />However, because tax-exempt securities are not very liquid and are not <br />readily available to match construction schedules, the most practical <br />way to access the tax-exempt market is through a money market fund. <br />Although money market funds which invest in taxable securities do not <br />exempt an issuer from arbitrage rebate requirements, many funds do <br />provide an automatic rebate calculation feature which relieves the <br />issuer of those complex and burdensome manipulations. <br /> <br />0O3lf/OO40f <br /> <br />8 <br />