The rate of interest on a Bond or Note which varies according to a formula set forth in the security. Variable interest rates are most often tied to the prime rate of a particular lending institution, the Consumer Price Index, Federal Funds rates or other money market measurements.
An interest rate that is not fixed over the term of a loan, bond or other fixed-income security but is allowed to vary according to the change in a specified index, such as the prime interest rate or the Treasury bill rate.
An interest rate on loans (including debt securities) that is modified regularly on the basis of an index which varies frequently according to market developments and conditions e.g. LIBOR and EURIBOR.