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Floating-Rate Tranches

Trading Term

A Collateralized Mortgage Obligation in which the interest rate is reset periodically to a margin above the index, but is subject to a maximum rate (cap) and minimum rate (floor). If the interest rate is adjusted by more than the change in the index, it is referred to as a super-floater. If the interest rate moves in the opposite direction to the designated index, it is referred to as an inverse floater.

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