An FRN is a bond that pays a quarterly or semiannual coupon indexed on a short-term interest rate such as the LIBOR.
a. Why does it make sense to use a short-term interest rate as the index?
b. Why are banks heavy issuers of FRNs?

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The Answer of An FRN is a bond that pays a quarterly or semiannual coupon indexed on a short-term interest rate such as the LIBOR.
a. Why does it make sense to use a short-term interest rate as the index?
b. Why are banks heavy issuers of FRNs?

An FRN Is a Bond That Pays a Quarterly or Semiannual