coupon leverage

coupon leverage
The inclusion of a multiple in the formula for calculating the coupon rate on an inverse floating-rate CMO. For example, an inverse floater with a multiple may pay interest at the rate of 22 percent minus the product of 2 times the 1-month London Interbank Offered Rate ( LIBOR). (Note that when the rate formula for a floater or inverse floater applies a multiple to a sum, the CMO tranche is called a super floater.

Financial and business terms. 2012.

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