Thoughts on Sections Not Specifically Outlined in LOS - Swaps

[Mattclarkscoop]

Examples being:
**structured notes and inverse floaters
**dual currency bonds
**noncallable bonds and swaptions
These sections are a little dense and NOT mentioned in LOS… Although have blue box examples… I know that EVERYTHING is “fair” game but wondering people’s thoughts on relevancy of these sections… My plan is to review back over it quickly and thus pretty much “punt” these and be super mad if they show up

 

[S2000magician]

Sounds like a good plan to me.
Inverse floaters are easy: the coupon rate goes down when LIBOR goes up.
They’re really interesting: their effective duration is longer than their time to maturity. A straight inverse floater – say, coupon rate = (12% − LIBOR) – has an effective duration that slightly less than twice the time to maturity. In short, they’re really, really twitchy bonds.