DEFINITION of 'Floating Price'
The leg of a swap that is based on a fluctuating interest rate. In a plain vanilla interest rate swap, there are two streams of cash flows. Each stream is based on the same amount of notional principal, but one stream pays interest on that notional principal at a fixed rate (or fixed price) and one stream pays interest on the notional principal at a floating rate (or floating price).
BREAKING DOWN 'Floating Price'
While the fixedrate stream does not change for the duration of the swap, the floating rate stream changes periodically. The floating rate will adjust as its benchmark interest rate, changes in accordance with market conditions. The benchmark is often LIBOR, but may also be the yield on oneyear U.S. Treasuries or another interest rate. Two parties, called counterparties, enter into fixedforfloating swap transactions to reduce their exposure to changes in interest rates or to attempt to profit from changes in interest rates.

Notional Principal Amount
In an interest rate swap, the predetermined dollar amounts on ... 
Amortizing Swap
An exchange of cash flows, one of which pays a fixed rate of ... 
Swap Rate
The rate of the fixed portion of a swap as determined by its ... 
Asset Swap
Similar in structure to a plain vanilla swap, the key difference ... 
Reversible Swap
An exchange of cash flows that allows one counterparty to use ... 
Bond Market Association (BMA) Swap
A type of swap arrangement in which two parties agree to exchange ...

Investing
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Plain interest rate swaps that enable the parties involved to exchange fixed and floating cash flows. 
Markets
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Trading
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Interest rate risk stems from the possibility that an interestbearing assetâ€™s value will change due to changing interest rates. 
Managing Wealth
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Puzzled by interest rate swap quotes terminology? Investopedia explains how to read the interest rate swap quotes 
Investing
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Investopedia explores the most common types of swap contracts. 
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Find out what makes currency swaps unique and slightly more complicated than other types of swaps. 
Trading
Hedging With Currency Swaps
The wrong currency movement can crush positive portfolio returns. Find out how to hedge against it. 
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Managing Interest Rate Risk
Learn which tools you need to manage the risk that comes with changing rates. 
Markets
The FastPaced World of Libor & Fixed Income Arbitrage
LIBOR is an essential part of implementing the swap spread arbitrage strategy for fixed income arbitrage. Here is a stepbystep explanation of how it works. 
Investing
Calculating Floating Stock
Floating stock is the number of shares a company has available for trade in the open market.

What does the notional principal of a derivative contract refer to?
Find out more about the notional principal amount, interest rate swap agreements and how the notional principal amount in ... Read Answer >> 
What are interest rate swaps on the OTC market?
Learn about interest rate swaps and how they are traded over the counter, and understand the impact of DoddFrank on swaps ... Read Answer >> 
How do companies benefit from interest rate and currency swaps?
An interest rate swap involves the exchange of cash flows between two parties based on interest payments for a particular ... Read Answer >> 
Can individual investors profit from interest rate swaps?
Find out how individual investors can speculate on interest rate movements through interest rate swaps by trading fixed rate ... Read Answer >> 
Do interest rate swaps trade on the open market?
Learn how interest rate swaps are traded on the OTC and interbank markets, and how these swaps can be used to arbitrage different ... Read Answer >> 
What is an absolute rate?
An absolute rate is easy to understand once you know the basics of an interest rate swap. An absolute rate is the fixed rate ... Read Answer >>