Flip-Flop Note
Definition of 'Flip-Flop Note'A type of fixed-income security that allows its holder to choose a payment stream from two different sources of debt. Flip-flop notes provide investors with two options of return, allowing them to choose the underlying debt with the higher yield for the period. |
|
Investopedia explains 'Flip-Flop Note'For example, a typical flip-flop note could be comprised of a fixed-rated debt and a floating-coupon bond. If the floating interest rate drops below the fixed coupon, the investor can choose to receive income from the fixed-rate debt. Inversely, when the floating rate exceeds the fixed coupon, the investor would switch to the floating-rate debt for income. In this situation, the flip-flop note is similar to a floating-rate bond with an interest rate floor. |
Related Definitions
Articles Of Interest
-
The Advantages Of Bonds
Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment. -
The Bond Market: A Look Back
Find out how fixed-income investments evolved in the past century and what it means today. -
Surviving Bear Country
Stay calm, play dead and keep your eyes open for attractive valuations. -
Advanced Bond Concepts
Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration. -
Bond Basics Tutorial
Investing in bonds - What are they, and do they belong in your portfolio? -
Making It Big On Wall Street
Read about some of the most glamorous Wall Street jobs and what it takes to land one. -
Quants: The Rocket Scientists Of Wall Street
Blend math, finance and computer skills to command a high - and well deserved - salary. -
Why Your Pension Plan Has Sovereign Debt In It
One type of security pensions tend to invest in is sovereign debt, or debt issued by a government. -
Build A Baby Berkshire
Get a piece of Warren Buffett's profit by using Form 13F to coattail his picks. -
Cash: A Call Option With No Expiration Date
Cash is generally regarded as a drag on investment returns, but sometimes it may be preferable to hold a substantial cash amount instead of investing it in other assets. This is because having ...
Free Annual Reports