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Learn about the following:

How floating rate notes work. Why they are bought and sold. Simple methods of evaluation. The risks FRNs present to investors.

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Course Summary

FRN menuFRN cash flowsFRN margins

FRN basis point valueFRN discount marginFRN risk

  • 60 Minutes
  • 10 question multiple choice test
  • How floating rate notes work
  • Why they are bought and sold
  • Simple methods of evaluation
  • The risks FRNs present to investors

Floating Rate Notes

1.How FRNs work

  • Floating rate notes
  • Principal and coupon payments
  • Interest calculations, example
  • Libor margins
  • Comparison with deposits

2. Issuing and investing in floating rate notes

  • Why FRNs suit certain borrowers and investors

3. Evaluating floating rate notes

  • Bonds at par
  • Bonds at a discount to par
  • Simple margin, example
  • Discount margin, example
  • Relative value

4. FRNs & risk

  • Liquidity risk
  • Credit risk
  • Market risk, example

5. Summary

6. Test

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