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A floater and an inverse floater are being created from a CMO tranche with a par value of $120,000 and a coupon rate of 7%.

A floater and an inverse floater are being created from a CMO tranche with a par value of $120,000 and a coupon rate of 7%. If the coupon rate of the floater is LIBOR + 1% and the coupon leverage is 4, then the coupon rate of the inverse floater will be ___- 4LIBOR

Question 7 options:

	29%
	31%
	35%
	37%

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