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Home > QFINANCE Dictionary > Definition of variable rate

Definition of

variable rate


interest rate that fluctuates a rate of interest on a loan that is not fixed, but can change with the current bank interest rates.

Related definitions of "variable rate"

Recommended Further Reading (Term count)
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    In finance, a swap is a derivative in which two parties agree to exchange one stream of cash flow against another. The swap buyer makes a stream of interest payments on a principal sum to the seller, based on the present value of the asset, for a fixed period of time. The seller then receives payments from the seller, which are usually based on a fixed rate, such as LIBOR. The swap valuation is the price that each party assigns to the components...
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    Almost all firms are exposed to interest rate risk, but it can manifest itself in different ways. A proper response to this risk can only come following a full understanding of the context of the firm and its strategy, along with a full evaluation of the risk. Firms should generate a well thought out key performance indicator (KPI) and then apply one or more of the many tools available in the market to transfer interest rate risk.

Definitions of ’variable rate’ and meaning of ’variable rate’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’variable rate’ and other financial terms with our online QFINANCE Financial Dictionary.

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