Although Caps, Floors, and Collars Can Be Created by Buying

question 23

Multiple Choice

Although caps, floors, and collars can be created by buying and selling options on financial futures, this strategy is difficult because

• A) exchange-traded options with sufficiently long maturities may not exist, or are illiquid, or are too expensive.
• B) these strategies limit the options of banks who use them.
• C) regulators prefer swaps to options.
• D) they can be used to hedge the $GAP, but not the duration gap.

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Definitions:

Manager Overloaded

A scenario where a manager has more responsibilities, tasks, or problems to deal with than they can reasonably handle.

More Consulting

Increasing the involvement of advisors or experts to offer guidance, recommendations, or solutions in decision-making processes.

More Empowerment

Enhancing the degree of autonomy and self-determination in individuals or teams to enable them to represent their interests in a responsible and self-determined way.

Person's Values

The beliefs and principles that guide an individual's behavior and decision-making, reflecting what is important to them.