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  • February 25, 2022
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Bounded Barrier Floor

A barrier floor which has also the features of a bounded floor. Payment to the floor buyer is made only if an underlying index or reference rate, such as LIBOR, falls below a pre-defined barrier level. However, the floor payout is limited to a specified amount over its term. This combination of features makes the premium of a bounded barrier floor (paid to the seller) generally lower than that of a barrier floor or a vanilla floor, but of course, for less protection than both.


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