Bonds with coupon rates that fall when the general level of interest rates rise are called ________.

Question

Quizplus · Accepted Answer

Inverse floaters are bonds with coupon rates that move in the opposite direction of interest rates. As interest rates rise, the coupon rate on these bonds falls, and vice versa. This inverse relationship can be attractive for investors who believe interest rates will fall in the future, as the value of their bond will increase.

Bonds with Coupon Rates That Fall When the General Level