Floor price, cap price & price band

CAP & FLOOR are Interest Rate Derivatives.

CAP Rate:- Borrower decides CAP rate in advance beyond which...he will not pay any Interest.

FLOOR Rate:- Investor decides FLOOR rate in advance...In which he decides minimum rate of interest to be received.

Price Band is used when company goes for IPO through book building process...Learned Merchant Bankers and Managers of issue decides Price Band for that shares....Bids are received...Price decided and Shares alloted accordingly...This covers entire chapter of SEBI...but I have tried in Brief :-)

Thanks and Regards.

When comapany go for a IPO/FPO Through Book Building Process than Price Band mentuioned in Prospectus For Example - 

150-175 (Price Band)

150 is Floor Price

175 is Cap Price

And CAP rate & Floor Rate also used in Derivatives.

thanx a lot rikin & ankit for explaining so nicely .