Which financial instrument typically has floating payments?

The financial instrument that typically has floating payments is bank debt. This type of debt often comes with interest rates that are tied to a benchmark rate, such as LIBOR or SOFR, which fluctuates over time. As a result, the interest payments that borrowers make can vary based on changes in these benchmark rates. This feature allows these loans to align more closely with prevailing market conditions, providing some benefits and risks to both lenders and borrowers.

High yield debt, common stock, and corporate bonds are generally associated with fixed payment structures. High yield debt often comes with a fixed interest rate that does not change over the life of the bond or loan. Common stock dividends are typically not guaranteed and are at the discretion of the company, thus are usually not characterized by stable or predictable payments. Corporate bonds can have fixed interest rates, meaning the payments remain constant over time. Therefore, bank debt is distinctive for its floating rate payment structure, making it the correct choice in this context.