A step-up cap which applies the minimum level of a given benchmark rate (index rate) as observed in the reset period in order to compute the maximum periodic increase in the capped rate. This structure effectively reduces the strike on the cap. Therefore, the periodic increase and/or the cap premium in this type of cap are larger than that of a regular step up cap.
Derivatives
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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