Page 73 - PRIAA Glossary

FLOATING PRODUCTION STORAGE OFFLOADING VESSEL (FPSO)
A vessel used to store oil or gas as it is produced from either an onshore or offshore oil field, with the capability for the oil or gas to be offloaded to other vessels for transportation to the ultimate destination. FPSOs have equipment onboard for processing the oil or gas.
FLOATING RATE
An interest rate whose value changes periodically over the life of an instrument. Floating rates usually reference a benchmark index, such as LIBOR, and they typically reset at the beginning of every floating leg payment period.
FLOATING RATE NOTE (FRN)
A bond which pays a variable rate of interest and can be used to hedge against return on fixed-income instruments when there is a rise in interest rates. The interest rate or coupon is often based on a variable component, such as an index or interest rate, plus an established percentage, such as LIBOR + 2 basis points, and can be updated on a variable schedule. FRNs are often issued by government agencies, and the
US Treasury began issuing them in 2013. Also known as “variable rate notes”.
FLOATING STORAGE OFFLOADING VESSEL (FSO)
A vessel used to store oil or gas as it is produced from either an onshore or offshore oil field, with the capability for the oil or gas to be offloaded to other vessels for transportation to the ultimate destination.
FLOOR
A lower limit placed on the payoff of a trade, guaranteeing a minimum payoff to the buyer.
FLOW TRADING
Trading where market makers use clients’ money to trade bonds, stocks and commodities. This type of trading can generate profits through the bid-offer spread, as the same market maker can be buyer and seller to the same security at the same time.
71
F