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Derivatives

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  • February 7, 2023
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Deferred Cap

A cap (interest rate cap) which provides protection against interest rate upward fluctuations for a future period starting at some future date and ending at the expiration date of the cap. Such a structure is often used in matching the terms of a bond issue (e.g. a delayed cap floating rate note).

A deferred cap is a strip of caplets each of which is a call option on a forward rate (deferred caplets).


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