Floating rate notes are essentially long-dated instruments, where the investor is repaid principal at the final maturity and receives a periodic coupon which changes with interest rate levels. It is also worth noting, FRNs are less susceptible to interest rate risk.
Key learning objectives:
What are floating rate notes (FRNs)?
When is the interest paid on a typical 5-year FRN?
Why does the floating rate note have very little interest rate risk?
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