by offering a higher quoted margin. For amortizing securities (e.g., mortgage-backed and some asset- backed securities) that are backed by loans that have a schedule of prin- cipal repayments, individual borrowers typically have the option to pay off all or part of their loan prior to the scheduled date. Any principal repayment in excess of the scheduled amount is called a prepayment. The right of borrowers to prepay is called the prepayment option. Basi- cally, the prepayment option is analogous to a call option. However, unlike a call option, there is not a call price that depends on when the borrower pays off the issue. Typically, the price at which a loan is pre- paid is its par value.   Put Provisions Floaters may also include a put provision which gives the security holder the option to sell the security back to the issuer at a specified price on designated dates. The specified price is called the put price. The puts structure can vary across issues. Some issues permit the holder to require the issuer to redeem the issue on any coupon payment date. Oth- ers allow the put to be exercised only when the coupon is adjusted. The advantage of the put provision to the holder of the floater is that if after the issue date the margin required by the market for a floater to trade at par rises above the issues quoted margin, absent the put option the price of the floater will decline. However, with the put option, the investor can force the issuer to redeem the floater at the put price and then reinvest the proceeds in a floater with the higher quoted margin.     3The required margin is the spread (either positive or negative) the market requires as compensation for the risks embedded in the issue. If the required margin equals the quoted margin, a floaters price will be at par on coupon reset dates.     PRICE VOLATILITY CHARACTERISTICS OF FLOATERS   The change in the price of a fixed-rate security when market rates change is due to the fact that the securitys coupon rate differs from the prevailing market rate. So, an investor in a 10-year 7% coupon bond purchased at par, for example, will find that the price of this bond will decline below par value if the market requires a yield greater than 7%. By contrast, for a floater, the coupon is reset periodically, reducing a floaters price sensitivity to changes in rates. For this reason, floaters are said to more "defensive" securities. However, this does not mean that a floaters price will not change.