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Coupon leverage
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<p>Coupon leverage, or leverage factor, is the amount by which a <a href="/facts/Reference_rate/HyW792XV">reference rate</a> is multiplied to determine the <a href="/facts/Floating_interest_rate/TIhrs0DF">floating interest rate</a> payable by an <a href="/facts/Inverse_floating_rate_note/yShH1Ttd">inverse floater</a>. Some debt instruments <a href="/facts/Leverage_(finance)/aLNbPlPP">leverage</a> the particular effects of interest rate changes, most commonly in inverse floaters. </p><p>As an example, an inverse floater with a multiple may pay <a href="/facts/Interest/qfNEuKg0">interest</a> a rate, or <a href="/facts/Coupon_(bond)/dEY27Cne">coupon</a>, of 22 percent minus the <a href="/facts/Product_(mathematics)/aXY11nGS">product</a> of 2 times the 30-day <a href="/facts/SOFR/dhVnbMTv">SOFR</a> (Secured Overnight Financing Rate). The coupon leverage is 2, in this example. The reference rate is the 30-day SOFR. </p>