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Topic: Floating rate

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	Floating exchange rate - Wikipedia, the free encyclopedia
		A floating exchange rate or a flexible exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market.
		A currency that uses a floating exchange rate is known as a floating currency.
		The opposite of a floating exchange rate is a fixed exchange rate.
	en.wikipedia.org /wiki/Floating_exchange_rate (292 words)

	Floating rate note - Wikipedia, the free encyclopedia
		Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a spread.
		The spread is a rate that remains constant.
		At the beginning of each coupon period, the coupon is calculated by taking the fixing of the reference rate for that day and adding the spread.
	en.wikipedia.org /wiki/Floating_rate_note (434 words)

	What is an interest rate swap? interest rate swaps
		Future floating rates of interest can be calculated, therefore, using the forward yield curve but this in itself is not sufficient to let us calculate the fixed rate payments due under the swap.
		Since the fixed rate payments due under the swap are, by definition, fixed, this change in the prevailing interest rate environment will affect future floating rate payments only: current market expectations are that the future floating rate payments due under the swap will be higher than those originally expected when the swap was priced.
		If, having done this, the floating rate payer wishes to terminate the swap with the fixed rate payer's agreement, then the positive net present value figure we have calculated represents the termination payment that will have to be paid to the fixed rate payer.
	home.earthlink.net /~green/whatisan.htm (3214 words)

	Mutual Funds
		Floating rate instruments have been in the news lately as debt markets continue to witness one of their most volatile phases.
		Floating rate funds have given investors a positive return over the last month, which was marked by volatility in bond prices.
		Floating rate funds strive to fulfill their role as a stabilising force in debt portfolios.
	www.personalfn.com /detail.asp?date=11/25/2003&story=2 (790 words)

	IMAGE • Interest Rate Management Products (Site not responding. Last check: 2007-11-02)
		An interest rate swap is a contract between two parties to exchange a series of fixed rate and floating rate interest payments over a predefined period of time, without exchanging the underlying principal amount referred to as a “notional” principal amount.
		Interest rate swaps are used to convert interest rate basis (e.g., from floating to fixed or fixed to floating) to enable issuers to lower their costs of borrowing.
		If during the term of the cap the floating rate index exceeds the strike on the reset date for any floating rate period, the issuer would receive an amount equal to the difference between the strike level and the index based on the notional amount for that period.
	image.temporarywebsite.com /products-interest.asp (2080 words)

	Floating rate advances and deposits with 1-yr repricing term ... (Site not responding. Last check: 2007-11-02)
		We are currently allocating a transfer rate equal to the 1-year repricing term to all our floating rate advances and deposits irrespective of the term of the product.
		For example, a 5-year floating rate loan and a 30-year floating rate loan are being transfer priced at the same rate.
		We are about to add a liquidity risk premium to the 1-year repricing term used for all floating rate advances and deposits so that, for example, the 30-year floating rate advances be allocated a transfer rate slightly more than the 5-year floating rate advances to cater for the liquidity risk.
	www.almprofessional.com /FTP/000000ca.htm (441 words)

	Floater (Floating Rate Note)
		A floating rate note (FRN) is a floater issued by a corporation, sovereign or government sponsored enterprise.
		Three-month or six-month Libor are two commonly-used reference rates, as are Treasury bill yields, the prime rate or the Fed funds rate.
		The coupon rate is calculated as the reference rate plus a fixed spread, which depends upon the issuer's credit quality and specifics of how the instrument is structured.
	www.riskglossary.com /articles/floater.htm (1194 words)

	Floating rate home loans a safer bet
		That's because the pricing differential between a floating rate loan and a pure fixed rate loan is about 1 to 1.25 percentage point, in favour of the former.
		So, it makes sense to stick to a floating rate scheme or go in for one if you are planning to take a home loan, as the equated monthly instalment even after the expected increase in interest rates will still be lower than the EMI under a fixed rate loan.
		Also, in the case of a conventional fixed interest rate loan, one might be unaware of the fact that housing finance companies have the right to change the loan's repayment schedules, and terms and conditions, which can have a significant bearing on your overall loan scheme.
	www.rediff.com /money/2005/nov/02loan.htm (558 words)

	MainStay Floating Rate Fund (Site not responding. Last check: 2007-11-02)
		Rated as non-investment grade, floating rate loans are not without risk and should be considered a speculative investment.
		Before investing in floating rate loans, default risk of principal and interest and recovery rate, as well as economic and industry trends must all be considered.
		Recovery rate is the ability of the holder to receive assets previously deemed collateral equal to the principal and interest of the loan in the event of a default.
	www.nylim.com /mainstayfunds/0,2058,20_1028191,00.html (1162 words)

	SearchForBonds.com - A Guide to Understanding Floating-Rate Securities (Site not responding. Last check: 2007-11-02)
		It is important to note that since short-term rates are usually lower than long-term rates, the initial coupon of a floater is typically lower than that of a fixedrate note of the same maturity.
		While the market value of a floater is relatively insensitive to changes in interest rates, the income received is, of course, highly dependent upon the level of the reference rate over the life of the investment.
		Credit ratings serve as a measure of the issuer’s financial health and should be taken into account when considering a purchase of floaters.
	www.raymondjames.com /Branches/c2c/32j/searchforbonds/article_floater.htm (1035 words)

	Businessworld: "82% still go for a floating rate"
		While the floating rate loans are at around 7- 7.5 per cent, the fixed rate loans are at around 8.5 per cent (fixed rate means where the rate cannot be changed).
		Another option under fixed rate is where the lender reserves the right to change the rate in case of extremely adverse conditions.
		Fixed rate loans are funded by fixed rate liabilities, and floating rate loans by floating rate liabilities.
	www.businessworldindia.com /sep2004/pf_interview.asp (1719 words)

	Interest Rate Swaps
		Interest rate swaps are defined as the agreements between two parties to exchange interest payments on an agreed national amount for a particular maturity.
		The most used swap is the third one which one party pays a floating rate and the other party pays a fixed rate.
		Company B must make floating rate funds available to Company A at a cheaper rate than that at which Company A could borrow in its own name, which is LIBOR+¼%.
	www.angelfire.com /ca/finrisk/Intswap.html (407 words)

	Proposed Offering of Senior Floating Rate Notes of Select Medical Holdings Corporation
		The floating rate notes will be general unsecured obligations of Holdings, will not be guaranteed by Select or its subsidiaries, and will bear interest at a rate per annum, reset periodically, equal to LIBOR plus an applicable margin.
		The floating rate notes are expected to be issued and sold in a private offering to institutional investors pursuant to Rule 144A and Regulation S under the Securities Act of 1933.
		The floating rate notes have not been and will not be registered under the Securities Act of 1933 or any state securities laws and may not be offered to sold in the Unites States absent registration or an applicable exemption from registration requirements.
	www.prnewswire.com /cgi-bin/stories.pl?ACCT=104&STORY=/www/story/09-07-2005/0004102162&EDATE= (302 words)

	Floating on the Tide: With interest rates finally set to move up, are floating-rate loan funds a possible life ...
		Floating on the Tide: With interest rates finally set to move up, are floating-rate loan funds a possible life preserver for clients.
		The rate increases, which moved the target rate from 4.75% to 5.5% in the span of five months, triggered a major decline in the fixed-income markets.
		Some mutual funds billed as "floating rate" are required to invest only a portion of their assets in floating-rate loans.
	www.financial-planning.com /pubs/fp/20040701028.html (1627 words)

	Mutual Funds
		To eliminate the interest rate risk income funds are witnessing a new concept of ‘Floating Rate’ with Franklin Templeton Fund being the first fund house to launch a fund on these lines — ‘Templeton Floating Rate Income fund’.
		In case of the former, the coupon rate was fixed because of which the price of the bond fluctuated as did the NAV of the fund.
		But in case of the floating rate fund, the coupon rate itself fluctuates as per the current benchmark rate for the debt securities e.g.
	www.personalfn.com /detail.asp?date=1/21/2002&story=4 (790 words)

	tata.com : Tata Mutual Fund launches Tata Floating Rate Fund
		As the debt market is expected to be volatile in the near to medium term, call rates are expected to be range-bound and the probability of spread compression between corporate bonds and government securities is high, the Tata Floating Rate Fund will aim to generate stable returns with low risks for the investor.
		Tata Floating Rate Fund is only the name of the scheme and does not in any manner indicate either the quality of the schemes, its future prospects or the returns.
		Basis risk (interest rate movement): During the life of the floating-rate security or a swap the underlying benchmark index may become less active and may not capture the actual movement in interest rates or at times the benchmark may cease to exist.
	www.tata.com /tata_assetmgt/releases/20031222.htm (679 words)

	Operating the floating exchange rate
		The floating exchange rate is nothing unique that the donors are insisting that Bangladesh should adopt.
		Many countries of the world are operating a floating exchange rate system as a relatively more efficient and gainful system in place of the fixed exchange rate system.
		The attraction of a floating exchange rate system is, that at least in theory it provides a kind of automatic mechanism for keeping the balance of payments in equilibrium.
	nation.ittefaq.com /artman/exec/view.cgi/2/568/printer (449 words)

	Exchange Rate Regimes in an Increasingly Integrated World Economy -- An IMF Issues Brief
		The approach taken by the IMF continues to be to advise member countries on the implications of adopting different exchange rate regimes, to consider the choice of regime to be a matter for each country to decide and to provide policy advice that is consistent with the maintenance of the chosen regime (Box 1).
		Pegged exchange rate regimes imply an explicit or implicit commitment by the policy authorities to limit the extent of fluctuation of the exchange rate to a degree that provides a meaningful nominal anchor for private expectations about the behavior of the exchange rate and the requisite supporting monetary policy.
		Accepting a country's preferred exchange rate regime does not prevent the IMF from offering the authorities an assessment of whether the prevailing exchange rate regime is broadly consistent with the country's external and domestic policy goals, nor from recommending policy changes that may be required in order to ensure such consistency.
	www.imf.org /external/np/exr/ib/2000/062600.htm (3140 words)

	Floating Price Rate as supplied by EagleTraders.com
		Commercial paper rates are the reported market rates for primerated commercial paper, whereas the prime rate is an administered rate which is usually changed, on the initiative of one or two of the major banks, with other banks falling in line with the initiated changes.
		Actually, the idea of linking the price rate as a floating rate with commercial paper rates is not new; one of the major banks used to base its prime rate on a moving average of commercial paper rates.
		Because of the volatile behavior of the prime rate in recent years, with many and frequent changes, prime rate futures trading would have appeal, it was felt, for firms borrowing at commercial banks.
	www.eagletraders.com /advice/securities/floating_price_rate.htm (530 words)

	Floating and Fixed Exchange Rates - Gold & Silver Forum
		In a floating regime, the central bank may also intervene when it is necessary to ensure stability and to avoid inflation; however, it is less often that the central bank of a floating regime will interfere.
		And while a floating regime is not without its flaws, it has proven to be a more efficient means of determining the long term value of a currency and creating equilibrium in the international market.
		Dirty floats are hardly "more efficient means of determining the long term value of a currency and creating equilibrium in the international market," it is rather in always in a state of disequilibrium, majority of the transacations is used for speculative purposes hence the allocation of money (credit) is wasted.
	www.goldismoney.info /forums/showthread.php?p=8792 (1693 words)

	Why a floating rate home loan is better
		The interest rate on a fixed home loan is around 1% - 1.25% higher than that for a flexible home loan.
		So, even if the floating rate rises in the range of 7% - 8%, it still is less than the fixed rate option.
		If you have a floating rate loan currently and want to switch to the fixed rate option, you will have to pay a switching fee.
	www.rediff.com /getahead/2005/nov/07home.htm (689 words)

	The Hindu Business Line : What, floating rate deposits?
		They borrow at floating rates, but invest at a fixed rate, and are therefore exposed to high interest rate risk.
		When interest rate increases, the outflow on the housing loan will be higher, but so will the inflow from the floating rate deposit.
		Typically, interest rates on fixed deposit rate will be higher than the floating rate deposit, as the former bears higher interest rate risk.
	www.thehindubusinessline.com /2003/12/22/stories/2003122200170900.htm (709 words)

	The Hindu Business Line : PFC plans floating rate for future loans
		This reduction in lending rates during the last few years was also due to the appreciation of the rupee and the fall in international and domestic rates.
		Accordingly, the sources said, the best option to take care of both lenders' and borrowers' interest rates was to switch some of the lending to floating rates.
		Floating rate loans are intended to avoid prepayment risks faced by most lenders.
	www.thehindubusinessline.com /2004/08/10/stories/2004081001270300.htm (592 words)

	Ross, Sinclaire & Associates : Investment Banking : Taxable Floating Rate Products
		Floating rate notes are debt instruments whose interest rates are adjusted periodically at a predetermined spread to a reference rate of a benchmark instrument.
		The rate thus calculated on the basis of the reference rate plus spread is applicable until the next reset date.
		Taxable floating rate option financing is a competitive source of funds.
	www.rsanet.com /investment_banking/floating_rate.html (178 words)

	Feature - Economic Implications of Floating Exchange Rates
		In a floating rate system, the exchange rate is determined directly by market forces, and is liable to fluctuate continually, as dictated by changing market conditions.
		The distinguishing characteristic of a floating exchange rate system is that the price of a currency adjusts automatically to whatever level is required to equate the supply of and demand for that currency, thereby clearing the market.
		These characteristics of the floating exchange rate mechanism have important implications both for the nature of our relationship with the global environment, and for the policy options available to the authorities in managing the economy.
	www.abc.net.au /money/currency/features/feat10.htm (1222 words)

	Chapter 23 FLOATING EXCHANGE RATE AND INTERNAL BALANCE
		With floating exchange rates the effect of a change in fiscal policy depends on how responsive international capital flows are to changes in interest rates.
		From the discussion of stabilization policy under fixed exchange rates, it appears that when the economy finds itself in one of the two cases of aggregate demand-policy dilemma explored in Chapter Twenty Two, letting the exchange rate float freely (rather than attempting to juggle monetary and fiscal policies) would solve all our troubles.
		Under fixed exchange rates, the central bank instead must resist the downward pressure on the exchange rate value of the country's currency by intervening in the foreign exchange market the central bank must buy domestic currency and sell foreign currency.
	www.wright.edu /~tdung/Chapter23_Pugel.htm (2486 words)

	Floating-Rate Securities
		The period between the date the rate is set and the payment date is referred to as a “lock-out” period.
		As a result, the rate of interest accrues daily at 1/360th of the nominal interest rate for the calculated number of days in the interest period; even in a 31-day month, interest is calculated on the basis of 30 days.
		For example, if an investor with liabilities tied to one index, such as the T-bill rate, matches those liabilities to assets tied to another rate, such as LIBOR, the investor could be subject to basis risk if the two rates move in different directions than expected or at differing rates of change.
	www.investinginbonds.com /learnmore.asp?catid=5&subcatid=21&id=275 (1095 words)

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