What does inverse floating rate note mean?
Definitions for inverse floating rate note
in·verse float·ing rate note
This dictionary definitions page includes all the possible meanings, example usage and translations of the word inverse floating rate note.
Wikipedia
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 floater, as interest rates rise the coupon rate falls. The basic structure is the same as an ordinary floating rate note except for the direction in which the coupon rate is adjusted. These two structures are often used in concert. As short-term interest rates fall, both the market price and the yield of the inverse floater increase. This link often magnifies the fluctuation in the bond's price. However, in the opposite situation, when short-term interest rates rise, the value of the bond can drop significantly, and holders of this type of instrument may end up with a security that pays little interest and for which the market will pay very little. Thus, interest rate risk is magnified and contains a high degree of volatility.
Numerology
Chaldean Numerology
The numerical value of inverse floating rate note in Chaldean Numerology is: 2
Pythagorean Numerology
The numerical value of inverse floating rate note in Pythagorean Numerology is: 4
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"inverse floating rate note." Definitions.net. STANDS4 LLC, 2024. Web. 24 Apr. 2024. <https://www.definitions.net/definition/inverse+floating+rate+note>.
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