Finance

Zero Spread

January 30, 2023
Finance

Collared FRN

January 30, 2023

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An interest rate floor in which the successive floorlets cover decreasing notional principal amounts. In other words, the notional principal amount declines over time as the principal is repaid (or amortized). The amortizing floor, like the amortizing swap, is primarily used to hedge loans the principal of which declines on a scheduled basis. It is also instrumental to hedge investments that pay out principal over time.

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