Investopedia explains 'Globally-Capped Contract '
Although both globally-capped and locally-capped contracts are very popular, many academics have questioned why the latter are more in demand than the former. According to Standard Finance Theory, the simpler globally-capped contracts should be preferred to more complex path-dependent contracts like those that are locally capped. The reason they are not, some academics contend, is due to unrealistic expectations. Others believe that sellers of retail financial products deliberately design them to be complex, in order to confuse consumers.
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