CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

The coupon formula for an inverse floater is ______.
A. coupon rate = K - L x (reference rate), where K and L are values specified in the prospectus for the issue
B. coupon rate - K = L x (reference rate), where K and L are values specified in the prospectus for the issue
C. coupon rate = K + L x (reference rate), where K and L are values specified in the prospectus for the issue
Explanation: The coupon formula for an inverse floater is:
coupon rate = K - L x (reference rate) where K and L are values specified in the prospectus for the issue.

User Contributed Comments 2

User Comment
o123 *just find a forumla that depicts an inverse relationship between the coupon and the reference rate.
akirchner1 Also, B and C are the same formula; K is just on different sides of the equation. By default, you would choose A.
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