BASIS POINTS Definition

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BASIS POINTS is 0.01% in yield. For example, in increasing from 5.00% to 5.05%, the yield increases by five basis points.

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INVERSE FLOATING RATE is a security that has a fixed maturity with a coupon rate that is reset at a pre-specified amount, minus a given short-term rate or index, such as 18% minus the six-month LIBOR rate, or 30% minus three times the 30-day commercial paper composite rate. These instruments provide a way to hedge against lower short-term rates and/or a steeper yield curoe without extending the maturity. As short­term rates decline, the coupon rate increases.

MONETARY is anything pertaining to or having to do with money, money creation, money supply, and the government management of money.

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