Coupon leverage

Coupon leverage, or leverage factor, is the amount by which a reference rate is multiplied to determine
the floating interest rate payable by an inverse floater.[1] Some debt instruments leverage the particular
effects of interest rate changes, most commonly in inverse floaters.[2]

As an example, an inverse floater with a multiple may pay interest at the rate, or coupon, of 22 percent
minus the product of 2 times the 1-month London Interbank Offered Rate (LIBOR).[3] The coupon
leverage is 2, in this example, and the reference rate is the 1-month LIBOR.

References
1. "Coupon leverage" (http://www.riskglossary.com/letters/c.htm). Risk Glossary. Retrieved
2008-06-18.
2. Marshall, John Francis (2000). Dictionary of Financial Engineering: Over 2,000 Terms
Explained. John Wiley & Sons. p. 51. ISBN 0-471-24291-8.
3. "Coupon leverage" (https://web.archive.org/web/20110709020116/http://www.dgcommercial
loans.com/glossary/c/coupon_leverage.html). DG Commercial Loans. Archived from the
original (http://www.dgcommercialloans.com/glossary/c/coupon_leverage.html) on 2011-07-
09. Retrieved 2008-06-18.

Retrieved from "https://en.wikipedia.org/w/index.php?title=Coupon_leverage&oldid=944861734"