What is a floating-rate bond?

A floating-rate bond is one that is issued by a company and attracts a variable interest rate. It is tied to a benchmark reference rate and mimics changes in it. It’s different from a fixed-rate bond, whose interest rate doesn’t fluctuate. Floating-rate bonds are beneficial for investors when interest rates are rising. It ensures that an investor’s debt portfolio moves in tandem with the interest rates in an economy.  


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