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Derivatives




Callable Cap Floater Swap


A cap floater swap which gives the payer of the capped leg the right but not the obligation to call off the transaction on any coupon date following the preset lockout date. Once the swap is cancelled, both counterparties must settle interest amounts owed up to the effective date of the cancellation. This structure allows issuers to hedge the risks associated with callable debts. An investor may enter into this swap to enhance yield.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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