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Credit enhancement

Credit enhancement is a common strategy used to decrease the interest payments on a bond. This is achieved by elevating the bond's credit rating, typically through the use of insurance in the form of a financial guarantee or standby letters of credit from a bank. By implementing this technique, investors can feel more secure in their investment and may be more inclined to purchase the bond. This is just one of many tactics used to manage risk and optimize financial outcomes in the world of finance.

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