Floating rate notes are long-term debt securities for which the interest rates are adjusted periodically in line with a benchmark interest rate. FRN's appeal to investors who might otherwise be reluctant to commit funds to fixed interest investments for lengthy periods in times of fluctuating interest rates. Typical investments for a cash unit trust.
A derivative security whose interest rates are pegged to some underlying interest rates or indexes. Most of the floaters used by Vanguard derive their interest rates from either the Fed Funds rate, the Repo rate (or repurchase rate determined by transactions between borrowers and lenders or buyers and sellers of government securities) or LIBOR (the London Interbank Offered Rate.) LIBOR is what high quality international banks charge each other for Eurodollar loans.
A note with a variable interest rate. Adjustments to the interest rate are usually made every 6 months and are tied to a certain money-market index. These protect investors against a rise in interest rates, but carry lower yields than fixed notes of the same maturity
Floating Rate Notes (FRNs) are bonds with interest payment rates - the coupon rate - linked to a money market index. The coupon rate is pegged to a benchmark floating rate, commonly Libor. Payments are refixed quarterly to three-month Libor or semi-annually to six-month Libor.
a note whose interest payment is dependent upon a certain reference rate
A security whose rate of interest or return adjusts or floats, based on other agreed-upon structure.
Debt instruments that bear a variable rate of interest. Coupons are linked to a floating interest rate index, and pay out at a predetermined yield spread to the index.
Bonds with variable coupon. The coupon is re-negotiated at the date of each payment.
Bonds whose coupon is not fixed, but variable.