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. The New York Times Financial Glossary

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drop lock UK US noun [C] FINANCE
an arrangement in which a loan with a changing interest rate will be replaced by a bond with an interest rate that does not change, if the interest level goes down to a particular level: »

A drop lock gives some protection to investors by combining a floating- and fixed-rate security.


Financial and business terms. 2012.

Look at other dictionaries:

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  • drop lock — The fixing of the interest rate on a floating rate note or preferred stock if it falls to a specified level. Bloomberg Financial Dictionary * * * drop lock UK US noun [C] FINANCE ► an arrangement in which a loan with a changing interest rate will …   Financial and business terms

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