variable-rate note(redirected from Variable Rate Note)
Also found in: Acronyms.
A bond with an interest rate that changes periodically. These bonds typically have coupons renewable every three months and pay according to a set calculation. For example, a note may have an interest rate of "EURIBOR + 1%" and pay whatever the EURIBOR rate happens to be at the time plus 1%. Some variable-rate notes have maximum and minimum interest rates, known as capped notes and floored notes, respectively. A variable-rate note with both a maximum and a minimum interest rate is called a collared note. In the United States, government sponsored enterprises issue most variable-rate notes, while banks do the same in Europe. See also: Adjustable-rate mortgage.
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See floating-rate note.
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.