The present invention discloses a method and apparatus of creating a financial instrument (figure 1) which, in exchange for money payments placed with a participating financial institution (figure 1), guarantees return of principal and payment of an adjustable rate of interest over a specified period of time and administering an adjustable rate loan system (figure 1). The interest crediting rate (figure 2) is established each year (figure 2) for the following year (figure 2), within a corridor of minimum and maximum contractually specified rates (figure 2). This rate is generally expected to float in excess of the rate of government securities of similar term, providing the lender (figure 1) with a new method of compensation for accepting longer term risk. The system (figure 1) protects and improves borrower (figure 1) solvency and credit quality by allowing reduced interest payments (figure 1) in periods of reduced financial ability. The financial instrument (figure 1) may be issued as a debt obligation, an annuity contract, a certificate of deposit or other form. The instrument may be an obligation of an insurance company, bank, single purpose corporation, a trust or other entity.
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