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What Is a Floating Rate Note?

By Matthew Frankel, CFP – Updated Jan 1, 2025 at 11:22AM

Key Points

  • FRNs adjust interest rates over time, linked to benchmarks like the federal funds rate.
  • They offer protection against rate hikes but generally yield less initially than fixed-rate notes.
  • Suitable for long-term portfolios, FRNs can act as a hedge in rising interest rate scenarios.
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