Derivatives
Hedged Inverse Floater
September 16, 2021
Share of Stock
Stock
September 16, 2021

An average that is computed by taking the inverse of the arithmetic average of inverse values, as in the following formula:

n/[(1/r1)+ (1/r2) +….. + (1/rn)]

Where: n is the number of observations, and r denotes a specific rate.

The harmonic average is usually used to valuate certain non-standard options.

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