Floating Rate Note
Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a quoted spread (a.k.a. quoted margin). The spread is a rate that remains constant. Almost all FRNs have quarterly coupons, i.e. they pay out interest every three months, though counter examples do exist. At the beginning of each coupon period, the coupon is calculated by taking the fixing of the reference rate for that day and adding the spread. A typical coupon would look like 3 months USD LIBOR +0.20%.
Read more about Floating Rate Note: Issuers, Variations, Risk, Trading, Simple Margin
Famous quotes containing the words floating, rate and/or note:
“I know, it must have been my imagination, but it makes me realize how desperately alone the Earth is. Hanging in space like a speck of food floating in the ocean. Sooner or later to be swallowed up by some creature floating by.... Time will tell, Dr. Mason. We can only wait and wonder. Wonder how, wonder when.”
—Tom Graeff. Tom Graeff. Young astronomer, Teenagers from Outer Space, after just seeing the invading spaceship through his telescope, and dismissing it (1959)
“We all run on two clocks. One is the outside clock, which ticks away our decades and brings us ceaselessly to the dry season. The other is the inside clock, where you are your own timekeeper and determine your own chronology, your own internal weather and your own rate of living. Sometimes the inner clock runs itself out long before the outer one, and you see a dead man going through the motions of living.”
—Max Lerner (b. 1902)
“Glorious bouquets and storms of applause ... are the trimmings which every artist naturally enjoys. But to move an audience in such a role, to hear in the applause that unmistakable note which breaks through good theatre manners and comes from the heart, is to feel that you have won through to life itself. Such pleasure does not vanish with the fall of the curtain, but becomes part of ones own life.”
—Dame Alice Markova (b. 1910)