An inverse floater and a super-inverse floater are more valuable to a purchaser if:
A) interest rates stay the same.
B) interest rates fall.
C) interest rates rise.
D) if held for a long time.

Question

Quizplus · Accepted Answer

Inverse floaters and super-inverse floaters increase in value when interest rates fall because their interest payments increase as rates decrease.

An Inverse Floater and a Super-Inverse Floater Are More Valuable