Interest Rate Floor


Definition of "Interest rate floor"

Richard   Matusich real estate agent
Richard Matusich, Real Estate Agent Richard G Matusich Associates Realtors Inc

Lower limit on the maximum possible interest rate an insurance company will pay. If the market interest rates are below that lower limit, the insurance company pays the lower limit rate. In this way, the insurance company can hedge its interest rate exposure (risk that interest rates will rise or fall at some stipulated time), reflected by changes in the value of its assets on the balance sheets.

 

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