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