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Assume that the formula for the coupon rates of a floater and an inverse floater are: Floater coupon rate: reference rate + 1.5% Inverse floater

Assume that the formula for the coupon rates of a floater and an inverse floater are: Floater coupon rate: reference rate + 1.5% Inverse floater coupon rate: 12% - reference rate Answer the following questions: a. What is the coupon rate of the fixed rate collateral for these two floating rate bonds? b. Suppose the floor for the inverse floater is 1%. What would be the cap of the floater?

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