Drop Lock

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DEFINITION of 'Drop Lock'

An arrangement whereby the interest rate on a floating rate note or preferred stock becomes fixed if it falls to a specified level.

BREAKING DOWN 'Drop Lock'

If a country had a floating exchange rate and a currency that suddenly dropped, the drop lock would fix the exchange rate once it hit a certain level.

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RELATED FAQS
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    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
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    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
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    If an investor owns one ordinary share of a company, that investor is entitled to one vote on all of that company's major ... Read Full Answer >>
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    The terms "equity market" and "stock market" are synonymous, both referring to the equity interests in publicly held companies, ... Read Full Answer >>
  5. How much, if any, influence do non-controlling interest shareholders have?

    Non-controlling interest shareholders do not typically have much influence. The level of influence can vary, however, depending ... Read Full Answer >>
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