Can someone please explain the equation of inverse floater especially coupon leverage?
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https://forum.sseiqforum.com/question/fixed-income-issuance-trading-n-funding/#comment-74720
I know what is inverse floater but don’t know what is coupon leverage?? Can you explain the same?
inverse floater coupon is
CR – (L*MRR)
where L is leverage if it is greater than 1 than we called it leveraged and if it is less than we call it deleveraged and if leverage is zero than coupon rate is maximum