floating-rate securities that exhibit little price volatility when interest rates change. In this chapter, we will discuss the general features of floating-rate securities (or simply "floaters"), their price volatility characteristics, and "spread" measures used by market participants. There are floaters in the agency debenture and corporate bond markets. There are also floating-rate products created in the mortgage-backed and asset-backed securities markets. These securities will be discussed in Chapters 9 and 10, along with short-term fixed-rate products created in these markets.       GENERAL FEATURES OF FLOATERS   A floater is a debt obligation whose coupon rate is reset at designated dates based on the value of some designated reference rate. The coupon formula for a pure floater (i.e., a floater with no embedded options) can be expressed as follows:   coupon rate = reference rate quoted margin   The quoted margin is the adjustment (in basis points) that the issuer agrees to make to the reference rate. For example, consider a floating- rate note issued by Enron Corp. that matured on March 30, 2000.1This floater made quarterly cash flows and had a coupon formula equal to 3- month LIBOR plus 45 basis points.   1This illustration will remind the investor that one must always keep credit risk in mind.   101     Under the rubric of floating-rate securities, there are several different types of securities with the feature that the coupon rate varies over the instruments life. A floaters coupon rate can be reset semiannually, quar- terly, monthly or weekly. The term "adjustable-rate" or "variable-rate"