INVERSE FLOATING RATE Definition

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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.

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LABOR INTENSIVE is used to describe industries or sectors of the economy that relies relatively heavily on inputs of labor, usually relative to capital but sometimes to human capital or skilled labor, compared to other industries or sectors.

PROFIT CENTER is a section of an organization that is responsible for producing profit, e.g., a division of a corporation that is not a stand-alone entity but is required to produce profits within the corporation.

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