Adjustable rate

(redirected from Floating Interest Rates)

Adjustable rate

Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. Typically, such issues have a set floor or ceiling, called caps and collars that limits the adjustment.

Adjustable Rate

An interest rate on a loan or convertible security that changes periodically. For example, an adjustable rate mortgage has a certain interest rate that changes with varying frequency. The frequency of the change is called the adjustment rate. Usually, the adjustable rate is set according to some outside benchmark; for example, a loan might set the interest rate at LIBOR + 1%. An advantage of adjustable rate loans is the fact that one's interest rate might fall over time; this is a particular advantage if prevailing interest rates are high at the time of the loan. A disadvantage to adjustable rates is the uncertainty associated with them: one's payments on the loan generally rise or fall.
References in periodicals archive ?
Choice of term loan / interest-only loans as well as the choice of fixed or floating interest rates decisive later.
The socialist MP emphasized that the legal changes were related to an EU Directive and assured that it would not make interest rates more expensive because the second change proposed by BSP affected the formation of floating interest rates.
Duke Energy InterNotes may be issued with fixed or floating interest rates, in denominations of $1,000 or integral multiples of $1,000 and with maturities between one and 30 years.
D K Vyas, CEO, Srei BNP Paribas, said, 'The cost of our funds is indeed increasing, but the same is being passed onto customers due to floating interest rates and we are glad to note that the defaults from our customers is not much, in fact its less than 0.
Real estate derivatives typically take the form of a total return swap on commercial or residential property indices against floating interest rates plus a spread.
The government said it will issue bonds only with fixed interest rate and stop issuing ones with floating interest rates in 2005.
Unlike the existing government bonds for purchase by individuals which carry floating interest rates and fall due in 10 years, the new bond will be a five-year issue with a fixed rate expected to be comparable with rates on fresh five-year government bond issues.
The product is fully multi-currency capable and provides branch and multi-company support, along with fully automated accounting, accruals, commissions, statements and support for fixed and floating interest rates and varying rates and rules for taxation and inflation.
Developing countries (many of which were ruled by dictators) grabbed the money at floating interest rates and in many cases spent it building monuments to their leaders, buying arms or socking it away in foreign banks.
While floating interest rates may look attractive, they can move very quickly in response to the financial markets.
The interest rate swap was invented in the early 1980s to aid companies able to borrow cheaply at floating interest rates but seeking fixed rates and vice versa.