Interest Rate Floor

Definition of "Interest rate floor"

Brian Burget real estate agent
Brian Burget, Real Estate Agent Coldwell Banker Residential Real Estate - Punta Gorda

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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