Business Glossary

Bonds: debt instrument with a variable interest rate tied to another interest rate, e.g., the rate paid by Treasury bills. A floating rate note, for instance, provides a holder with additional interest if the applicable interest rate rises and less interest if the rate falls. It is generally best to buy floaters if it appears that interest rates will rise. If the outlook is for falling rates, investors typically favor fixed rate instruments. Floaters spread risk between issuers and debtholders.
Insurance: endorsement to a homeowner's or renter's insurance policy, a form of property insurance for items that are moved from location to location. Typically, a floater is bought to cover jewelry, furs, and other items whose full value is not covered in standard homeowner's or renter's policies. A standard homeowner's policy typically covers $1,000 to $2,000 for jewelry, furs, and watches. Also called a rider.