Q: do you know what a "floating-rate note" is?
Category: glossary , Asked by: X. G. From Belgium
A: the "floating-rate note " is A note with a variable interest rate. The adjustments to the interest rate are usually made every six months and are tied to a certain money-market index. Also known as a "floater". These protect investors against a rise in interest rates (which have an inverse relationship with bond prices), but also carry lower yields than fixed notes of the same maturity. It's essentially the same concept as an adjustable-rate mortgage, except FRNs are investments (not debt). Visit GCI