An Interest Rate _____ Is a Call Option on Interest

question 294

Multiple Choice

An interest rate _____ is a call option on interest rates, a _____ is a put option on interest rates and a combination of the two is called a _____.

• A) cap; floor; collar
• B) ceiling; cap; collar
• C) floor; cap; caption
• D) caption; floor; cap
• E) cap; floor; caption

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Definitions:

Linear Equation

An equation that makes a straight line when plotted on a graph, typically of the form \(ax + by = c\).

Solve

To find the value or values that satisfy an equation, inequality, or other mathematical problem.

Linear Equation

A mathematical equation where every term is a constant or the multiplication of a constant with one variable, resulting in a graph that outlines a straight line.

Solve

Refers to finding the value or values that satisfy an equation or system of equations.