Inverse Floater definition explanation
What is Inverse Floater?
A bond or other type of debt whose coupon rate has an inverse relationship to short-term interest rates. Read more for examples and further explanation including related video clips and also comments
Example explains Inverse Floater
With an inverse floater, as interest rates rise, the coupon rate falls. When short-term interest rates fall, an inverse floater holder benefits in two ways:
1) The bond appreciates in price
2) The yield increases
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