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What's the meaning of floating-rate notes?

帮考网校2020-10-12 15:55:53
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Floating-rate notes are debt securities that have a variable interest rate which is adjusted periodically based on a reference rate such as LIBOR or the prime rate. The interest rate on these notes is not fixed, but rather "floats" with changes in the reference rate. This means that the interest payments on the note can go up or down depending on the movements of the reference rate. Floating-rate notes are often used by issuers who want to borrow money without locking in a fixed interest rate, or by investors who want exposure to interest rate changes without taking on the risk of fixed-rate debt.
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