Collared Floating-Rate Note

Exchanges
Broad-Based Index
December 25, 2022
Derivatives
Geometric Brownian Motion
December 25, 2022

A floating-rate note (FRN) which has a minimum and a maximum interest rate, i.e., an embedded collar. This collar has the effect of limiting the reference rate to minimum and maximum values so that the holder can confine fluctuations in the reference rate to a specific range (a lower and an upper boundary).

A collared floating-rate note is also known as a mini-max floating-rate note or a collared floater.

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