Inverse floater - Financial definition
Financial acronyms
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Concise definition of the term inverse floater
Inverse floaters are floating rate bonds whose coupon rate moves in the opposite direction from the reference rate.
Comprehensive definition of the term inverse floater
An inverse floater could, for example, have a quarterly coupon determined by the following formula:
10% - 2 × (3-month LIBOR)
Thus, when the 3-month LIBOR falls, the coupon rate goes up and vice versa.