from December 2001 until maturity, the quoted margin "steps up" to 90 basis points. A range note is a floater where the coupon payment depends upon the number of days that the specified reference rate stays within a prees- tablished collar. For instance, Sallie Mae issued a range note in August 1996 (due in August 2003) that makes coupon payments quarterly. For every day during the quarter that 3-month LIBOR is between 3% and 9%, the investor earns 3-month LIBOR plus 155 basis points. Interest will accrue at 0% for each day that 3-month LIBOR is outside this collar. There are also floaters whose coupon formula contains more than one reference rate. A dual-indexed floater is one such example. The cou- pon rate formula is typically a fixed percentage plus the difference between two reference rates. For example, the Federal Home Loan Bank System issued a floater in July 1993 (due in July 1996) whose coupon rate was the difference between the 10-year Constant Maturity Treasury rate and 3-month LIBOR plus 160 basis points. Although the reference rate for most floaters is an interest rate or an interest rate index, numerous kinds of reference rates appear in coupon formulas. This is especially true for structured notes. Potential reference rates include movements in foreign exchange rates, the price of a com- modity (e.g., gold), movements in an equity index (e.g., the Standard & Poors 500 Index), or an inflation index (e.g., CPI). Financial engineers are capable of structuring floaters with almost any reference rate. For example, Merrill Lynch issued in April 1983 Stock Market Reset Term Notes which matured in December 1999. These notes delivered semian- nual coupon payments using a formula of 0.65 multiplied by the annual return of the Standard & Poors MidCap 400 during the calendar year. These notes have a cap rate of 10% and a floor rate of 3%. Of course, with these non-traditional (i.e., non-interest rate refer- ence rates) floaters expose portfolios to different types of risks. More- over, some of them are not simple to value-an undesirable feature for a cash portfolio.     Call and Prepayment Provisions Just like fixed-rate issues, a floater may be callable. The call option gives the issuer the right to buy back the issue prior to the stated maturity date. The call option may have value to the issuer some time in the future for two reasons. First, market interest rates may fall so that the issuer can exercise the option to retire the floater and replace it with a fixed-rate issue. Second, the required margin decreases so that the issuer can call the issue and replace it with a floater with a lower quoted mar- gin.3The issuers call option is a disadvantage to the investor since the proceeds received must be reinvested either at a lower interest rate or a