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Floating-Rate Contract |
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Floating-rate contract An guaranteed investment instrument whose interest payment is tied to some variable (floating) interest rate benchmark, such as a specific-maturity Treasury yield. Floating-Rate Contract A pension plan purchased through a bank or an insurance company for a lump sum where the principal is guaranteed by the issuer and where the payoff varies according to a variable interest rate. One may receive payments from a floating-rate contract either in installments or as a lump sum after retirement. A floating-rate contract provides the pensioner with a small interest rate that may change and is not guaranteed, but the fact that the principal is guaranteed makes it a relatively low-risk investment. A floating-rate contract is a type of guaranteed investment contract. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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