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Derivatives




Stepped Capped Floater


A type of capped floored floater in which the capped coupon varies over the life of the note/ bond. An example is a bond that pays a floating coupon that is subject to a cap rate (say 6%) whose level is stepped (up) from time to time: it adjusts by steps of 0.3% upward. This floater helps an investor adjust a previously set cap even higher depending on prevailing market rates at the time.



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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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