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:
“The true reformer does not want time, nor money, nor coöperation, nor advice. What is time but the stuff delay is made of? And depend upon it, our virtue will not live on the interest of our money. He expects no income, but outgoes; so soon as we begin to count the cost, the cost begins. And as for advice, the information floating in the atmosphere of society is as evanescent and unserviceable to him as gossamer for clubs of Hercules.”
—Henry David Thoreau (1817–1862)
“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)
“I note that the Africa loves to depict the grace of reptiles.”
—Zora Neale Hurston (1891–1960)