For example, a floater bond may have the coupon rate set at "T-bill rate plus 0.5%".
This type of instrument is more beneficial to the holder as interest rates are rising because it allows the holder to participate in the upward movement in rates. Conversely a floater is less advantageous to the holder when rates are decreasing because the rate at which they are receiving interest is declining.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
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