inverse floater

inverse floater
Bonds whose coupon rates increase as rates decline and decrease as rates rise. The coupon rate is based on a formula using an index and moves in the opposite direction of changes in that index. Some inverse floaters may be a type of structured note. Other inverse floaters, such as interest-only ( I/O) and principal-only ( P/O) strips are types of collateralized mortgage obligations (CMOs). American Banker Glossary
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A derivative instrument whose coupon rate is linked to the market rate of interest in an inverse relationship. Bloomberg Financial Dictionary
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A bond with a coupon rate structured to move in the opposite direction of interest rates. Exchange Handbook Glossary

Financial and business terms. 2012.

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  • Inverse Floater — A bond or other type of debt whose coupon rate has an inverse relationship to a benchmark rate. An inverse floater adjusts its coupon payment as the interest rate changes. When the interest rate goes up the coupon payment rate will go down… …   Investment dictionary

  • Inverse floating rate note — An inverse floating rate note, or simply an inverse floater, is a type of bond or other type of debt instrument used in finance whose coupon rate has an inverse relationship to short term interest rates (or its reference rate). With an inverse… …   Wikipedia

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