A Cap Is an Interest Rate Agreement in Which One

question 29

True/False

A cap is an interest rate agreement in which one party agrees to pay the other if the reference rate exceeds the strike rate; an interest rate floor is an interest rate agreement in which one party agrees to pay the other if the reference rate falls below the strike rate.

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Definitions:

Gradual Loss

A slow diminution or decline in value, quality, or quantity over time.

Anterograde Amnesia

A condition where a person is unable to form new memories after the event that caused the amnesia, although long-term memories from before the event remain intact.

New Memories

The formation and storing of information and experiences that can be recalled at a later time, a fundamental process in learning.

Inability

The state of being unable to perform a function or action due to physical or mental limitations.