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Derivatives




Stepped Floored Floater


A type of capped floored floater in which the floored coupon varies over the life of the note/ bond. An example is a bond that pays a floating coupon that is subject to a floor rate (say 3%) whose level is stepped from time to time: it adjusts by steps of 0.1% downward. This floater helps an issuer adjust a previously set floor even lower 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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