A range accrual note (RAN) that is a structured in such a way that the coupon is linked to the performance of a reference index being the CMS rate. It is used by investors to obtain an above-market return by having exposure to the CMS rate risk. It is also used to hedge positions in constant maturity swaps.

A CMS range accrual note has a target range of the spot CMS rates. If an investor has a view that the underlying spot CMS rate will stay within the range, he may choose to buy a CMS range accrual note so that interest may be accrued at an above-market rate on each day that the CMS rate is within the range. No interest will accrue on each day that the CMS rate is outside the range.

This instrument could be callable or puttable.