Adjustable rate

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Related to Variable rate: Variable Rate Loan

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 ?
Some municipalities have reported large reductions (sometimes over 30 percent) in the amount of waste disposed after starting variable rate programs.
Mark Page, executive director of the New York City Municipal Water Finance Authority, said, "The Water Authority believes that its new variable rate bond program will not only diversify investor interest for its billion dollar a year capital program but will also contribute over time to the Authority's objective of holding down the size of required water rate increases by accessing a lower cost source of capital.
To assure the adequacy of funds available for variable rate debt service, also pledged to the variable rate bonds are payments to be received under interest rate swap agreements and interest rate cap agreements between the authority and a qualified swap provider, defined as an entity rated in one of the two highest rating categories by Moody's.
During the variable rate mode, holders have the option to tender their bonds on any business day, following the required prior notice to the remarketing agent and trustee.
While bonds bear interest in the variable rate mode, interest payments are due on the first business day of each month, commencing Dec.
The rating actions reflect substantially increased expected loss statistics for each of the classes of variable rate notes.
NEW YORK -- Fitch affirms its rating of 'AAA/F1+' on the Hall Family Foundation, its 'AAA/F1+' rating on the Missouri Development Finance Board Variable Rate Demand Cultural Facilities Bonds, (The Nelson Gallery Foundation), Series 2004A.
6,265,000 variable rate healthcare facilities revenue bonds, series 2006A;
The series 2006C CHFFA bonds are unenhanced variable rate demand obligations.
6 billion in outstanding debt, of which approximately 50% will be fixed rate, and 50% will be variable rate, which Fitch views as manageable given PHS' strong credit profile.
35 million Kansas Development Finance Authority variable rate demand revenue bonds, series 2006C (Sisters of Charity of Leavenworth Health System);

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