FRANK J. FABOZZI, PH.D., CFA, CPA
Professor of FinanceEDHEC Business School
STEVEN V. MANN, PH.D.Professor of FinanceMoore School of BusinessUniversity of South Carolina
Under the rubric of floating-rate securities or simply floaters, there are several different types of securities with an essential feature in common: coupon interest will vary over the instrument’s life. Floaters, which were first introduced into the European debt market and issued in the United States in the early 1970s, are now issued in every sector of the bond market—government, agency, corporate, municipal, mortgage, and asset-backed—in the United States and in markets throughout the world. Although a floater’s coupon formula may ...