convertible floating-rate note

Convertible Floating-Rate Note

A debt security with a floating interest rate that may be exchanged for another debt security with a higher, fixed interest rate. Most floating-rate notes expose holders to the risk that declining interest rates will reduce their returns. A convertible floating-rate note protects holders by giving them the option to lock-in their return, should interest rates fall significantly.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

convertible floating-rate note

A floating-rate note that gives the holder the option of exchanging it for a longer-term debt security with a specified coupon. Unlike a regular floating-rate note, the convertible feature protects investors against declining interest rates.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.