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During times when cash is hard to raise for business expansion purposes, the market interest rates are usually high. Though this is not a permanent situation, if a company offers a fixed rate bond at the prevailing rate, it would have to continue to make the payments until the bond maturity. There are chances that the situation may improve and market interest rates come down. In such cases, companies that raised money at higher rates a few years/months back are going to lose a lot of money.
Floating rate notes are an easy alternative wherein, the payments made out to investors are going to be in line the prevailing market interest rates.
Companies that need cash and predict the market rates to fall usually issue FRNs
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What are the floating rate instruments?
A Floating rate instrument is one in which the rate of returns on the invested amount might vary from time to time. It is not fixed.
Which exchange rate is following by India?
Floating Exchange Rate
What is floating rate bond?
A floating rate note (FRN) is a bond whose coupon (interest) goes up and down with market rates.
If the supply and demand for currency determines the exchange rates this is called?
floating
Fiscal and monetary policies under managed floating exchange rate regime?
Fiscal and monetary policies under managed floating exchange rate regimes?
What are the floating rate instruments?
A Floating rate instrument is one in which the rate of returns on the invested amount might vary from time to time. It is not fixed.
What is the symbol for Pioneer Floating Rate Trust in the NYSE?
The symbol for Pioneer Floating Rate Trust in the NYSE is: PHD.
What is the difference between a fixed rate bond and a floating rate bond?
"A fixed rate bond is a bond that has a fixed rate, whereas a floating rate bond can change due to different variables. BNET is a great business resource that will help with learning about fixed and floating rate bonds."
Home loan interest rates?
home loan Interest Rate is ------ 10.25% Floating Rate of SBI 11.00% Flat Rate of HDFC 10.50% Floating Rate of HDFC
In what year did Pioneer Floating Rate Trust - PHD - have its IPO?
Pioneer Floating Rate Trust (PHD)had its IPO in 2004.
Which exchange rate is following by India?
Floating Exchange Rate
What is the symbol for PennantPark Floating Rate Capital Ltd in NASDAQ?
The symbol for PennantPark Floating Rate Capital Ltd. in NASDAQ is: PFLT.
What is the symbol for Nuveen Floating Rate Income Fund in the NYSE?
The symbol for Nuveen Floating Rate Income Fund in the NYSE is: JFR.
How do you prepare a worksheet showing interest payments on a floating rate?
you have to have a sheet with several different interest rates because the rate is floating and not constant.
In what year did PennantPark Floating Rate Capital Ltd - PFLT - have its IPO?
PennantPark Floating Rate Capital Ltd. (PFLT) had its IPO in 2011.
In what year did Nuveen Floating Rate Income Fund - JFR - have its IPO?
Nuveen Floating Rate Income Fund (JFR)had its IPO in 2004.
What is floating rate bond?
A floating rate note (FRN) is a bond whose coupon (interest) goes up and down with market rates.
