PREREFUNDING Definition

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PREREFUNDING is the the issuing of new securities to refund an outstanding security. Proceeds from the new securities are used to buy instruments, usually U.S. Treasuries, to be held in escrow for the purpose of retiring bonds or preferred stock.

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ACTUAL COST is the amount paid for an asset; not its retail value, market value or insurance value.

RATE BASE is the value of a regulated public utility and its operations as defined by its regulators and on which the company is allowed to earn a particular rate of return.

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