A barrier cap which has also the features of a bounded cap. Payment to the cap buyer is made only if an underlying index or reference rate, such as LIBOR, breaks out above a specified barrier level. However, the cap payout is limited to a specified amount over its term. This combination of features makes the premium of a bounded barrier cap (paid to the seller) generally lower than that of a barrier cap or a vanilla cap, but, of course, for less protection than both.
November 13, 2023