Introduction of the term Floating rate bonds

Question

Give a brief introduction of the term Floating rate bonds?

Answer 1

Floating rate notes (or FRNs) are the bonds that have a similar ratio with the money market reference rate and they are also named as variable coupon. It is made up of federal funds rate and spread that is the rate that remains steady. FRNs got the coupons where the holders can pay out the interest every three months and this is also named as quarterly coupons.