Islamic Finance
Forex Wa’ad
August 17, 2021
Derivatives
Ratchet Floor
August 17, 2021

A nonstandard interest rate cap in which the cap rate for each caplet is equal to the sum of the LIBOR rate at the previous reset date and a specified spread. For example, let the previous LIBOR rate be 5% and the spread be set at 1%, then the cap rate of the ratchet cap is 5% plus 1%, or 6%.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts