Variable interest rates do carry a greater degree of risk than going with a fixed rate.
Variable Interest Rate
An interest rate that moves up and down based on the changes of an underlying interest rate index.
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Variable interest rate
See: Adjustable rate
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the insured's portfolio market value at the time of death.
Variable interest rates
Variable prepayment rates.
Designing such models in the first place is complicated because prepayment variations are a behavioural function of the stochastic interest rate. (They tend to go up as interest rates come down.) ...
Variable interest rate on a debt security. For example a note with a variable coupon of LIBOR + 0.5% will pay interest of whatever the LIBOR rate is at the time of coupon payment plus 0.5%.
Variable-rate Bond ...
Bonds with a variable interest rate (floaters), which changes every three or six months in line with short-term euro market interest rates (LIBOR or Euribor). The coupon may also be linked to the inflation rate.
Floating-rate bonds, with a variable interest rate that is tied to a benchmark such as a money market index. The "coupon" is then periodically reset, normally every three or six months.
Whether a bond pays the investor a fixed interest rate (also known as the coupon rate), which cannot be changed during the life of a bond, or a variable interest rate, the market price of a municipal bond will vary as market conditions change.
Debt securities that have a variable interest rate that is tied to another interest rate instrument, such as the 10-year U.S. Treasury note rate.
Variable interest rates of loans generally shift up and down based on various market movements. By shifting to a fixed rate of interest in a loan the risks are considerable reduced.
Medium term credit with a variable interest rate, which is governed by the currently prevailing rates on the Euromarket.
Round lot:
The minimum quantity acceptable for dealing.
The rate of Interest that major international banks in London charge each other for borrowings. Many Variable interest rates in the US are based On spreads off LIBOR. By contrast with the Bid rate LIBID quoted by banks seeking such deposits. ...
The put option feature of the obligation has the practical effect of making the securities short-term from the perspective of the investor; the variable interest rate on the securities, therefore, ...
Government, which means your principal is guaranteed.
What Happens in Deflation?
If we should enter a deflationary environment, the variable interest rate would be negative so your bond would not increase in value.
It is used in the calculation of some private student loans. Many credit cards and home equity lines of credit with variable interest rates have their rate specified as the prime rate (index) plus a fixed value commonly called the spread.
Bond investors are still referred to sometimes as "coupon clippers." This interest rate does not vary over the life of the bond, although there are some bonds, which have a variable interest rate tied to an external index.
There are is no principal exchange only interest payments. One party pays a fixed interest rate to the other party and in return receives a variable interest rate, typically Libor. Swaps are used for both hedging and trading purposes.
 See also: Variable, Interest Rate, Rate, Interest, Market
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