time remaining to the next coupon reset date 2. whether or not the markets required margin changes 3. whether or not the cap or floor is reached   Below we discuss the impact of each of these factors.   Time Remaining to the Next Coupon Reset Date The longer the time to the next coupon reset date, the greater a floaters potential price fluctuation. Conversely, the less time to the next coupon reset date, the smaller the floaters potential price fluctuation. To understand why, consider a floater with five years remaining to maturity whose coupon formula is the 1-year Treasury bill rate plus 50 basis points and the coupon is reset today when the 1-year Treasury bill rate is 5.5%. The coupon rate will then be set at 6% for the year. One month from now, the investor in this floater would effectively own an 11-month instrument with a 6% coupon. Suppose that at that time, the market wants a 6.2% yield on comparable issues with 11 months remaining to maturity. Then, our floater would be offering a below mar- ket rate (6% versus 6.2%). The floaters price must decline below par to compensate for the sub-market yield. Similarly, if the yield that the mar- ket requires on a comparable instrument with a maturity of 11 months is less than 6%, the price of a floater will trade above par. For a floater in which the cap is not reached and for which the market does not demand a margin different from the quoted margin, a floater that resets daily will trade at par value.     Whether or Not the Markets Required Margin Changes At the initial offering of a floater, the issuer will set the quoted margin based on market conditions so that the security will trade near par. If after the initial offering the market requires a higher margin, the floaters price will decline to reflect the higher spread. We shall refer to the margin that is demanded by the market as the required margin. So, for example, consider a floater whose coupon formula is 1-month LIBOR plus 40 basis points. If market conditions change such that the required margin increases to 50 basis points, this floater would be offer- ing a below market quoted margin. As a result, the floaters price will decline below par value. The price can trade above par value if the required margin is less than the quoted margin-less than 40 basis points in our example. The required margin for a specific issue depends on: (1) the margin available in competitive funding markets, (2) the credit quality of the