INVERSE FLOATER

A bond or other debt security with an inverse relationship to a benchmark rate. It modifies its coupon payment to the changes in the interest rate. When the interest rate increases, the coupon payment rate decreases because the interest rate is subtracted from the coupon payment. A higher interest rate denotes more is deducted, hence less is given to the holder. A ratio of the interest rate can also be utilized instead of one to one relationship. Also called inverse floating rate note.