A tranche that has a coupon interest rate that adjusts in the opposite direction to its index is referred to as:

Question

Quizplus · Accepted Answer

An inverse floater tranche has a coupon interest rate that adjusts in the opposite direction to its index. This means that as the index rate goes up, the interest rate on the tranche will go down, and vice versa. The other answer choices (A, C, and D) are not correct terminology for this type of tranche.

A Tranche That Has a Coupon Interest Rate That Adjusts