Why were inverse floaters developed?
A)To exchange specified periodic cash flows in the future based on some underlying instrument.
B)To better manage their interest rate,foreign exchange,and credit risks of corporate enterprises.
C)To lower the cost of financing for government agencies.
D)To determine payments and timing of payments when there is no standardized contract.

Question

Quizplus · Accepted Answer

Inverse floaters were developed to lower the cost of financing for government agencies by allowing them to benefit from declining interest rates.

Why Were Inverse Floaters Developed