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There Are Two Types of Swaptions - a Payer Swaption

question 15

Essay

There are two types of swaptions - a payer swaption and a receiver swaption. Describe each of these two types of swaptions.


Definitions:

Price Discrimination

A pricing strategy where identical or very similar goods or services are sold at different prices by the same provider in different markets or to different customers, based on differences in price sensitivity.

Monopolist

An individual or entity that is the sole provider of a particular good or service, possessing significant control over market prices and output.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on factors like demand, income level, or purchase volume.

Marginal Revenue

The additional income generated from the sale of one more unit of a product or service.

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