Characteristics of a reverse floater


Which of the following statements most accurately reflects characteristics of a reverse floater (with no options attached)?

A. A portfolio of reverse floaters carries a marginally higher duration risk than a portfolio of similar maturity normal floaters.

B. A holder of a reverse floater can synthetically convert his position into afixed rate bond by receiving floating and paying fixed on an interest rateswap.

C. A reverse floater hedges against rising benchmark yields.

D. A reverse floater's price changes by as much as that in a similar maturity fixed rate bond for a given change in yield.

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Finance Basics: Characteristics of a reverse floater
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