Barrier cap - Financial definition
Financial acronyms
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Concise definition of the term barrier cap
A barrier cap is a modified interest rate cap that only pays a return to the buyer when the reference rate, usually LIBOR, is above the defined barrier level.
Comprehensive definition of the term barrier cap
When above this level, the barrier cap payout has the same as a traditional interest rate cap. The barrier feature is usually applied to each reference rate period separately. A traditional interest rate cap can be considered as a barrier cap where the cap strike and cap barrier are set at the same level.