My understanding of the Closed End Fund ARPS is that these are instruments issued by the fund managers (Blackrock, Nuveen etc..) to finance leveraged purchases of bonds/preferred stocks etc.. that usually pay a higher interest than the ARPS. The funds agree  to  pay  interest  to the  owner of these  ARPS securities and this interest  is  based on a current market  index  such as  the discount or fed funds rate + a fixed premium.

These ARPS trade in auctions, and up until a month ago were considered very liquid and relatively attractive because they paid more than most money market funds. When a holder of an ARPS is unable to sell at these auctions, he is entitled to an additional  penalty premium usually 1/2 percent of the explicit rate index and base premium.

 Questions:

(1) Do the ARPS mature?

(2) Can the holders of these ARPS force repayment by the issuers? 

(3) Does the penalty premium also move down with the base index? Or is it a fixed amount. In other words, if interest rates keep falling, will the penalty rate fall also becuase it is also index based?

(4) Is is possible that the funds simply never pay off the ARPS? What  is  going to make them pay it off? Litigation?

(5) If forced to pay off the ARPS, what would be a good replacement leverage vehicle?

Manny