Which One of the Following Terms Is Correctly Identified

question 190

Multiple Choice

Which one of the following terms is correctly identified?

• A) Caption: a price cap on a call option.
• B) Floor: a call option on an interest rate.
• C) Derivative: an asset with a value that is derived from some specified future event.
• D) Swaption: an option to exchange a floating-rate loan for a fixed-rate loan.
• E) Cross-hedge: an agreement to exchange specified cash flows at specified time intervals in the future.

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Definitions:

Liking

A feeling of affection or fondness towards someone or something.

Suffered

Experienced or been subjected to something bad or unpleasant.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.

Underestimate

To judge something to be smaller or less important than it actually is.