Using the Proceeds from the Simultaneous Sale of a Floor

question 2

Multiple Choice

Using the proceeds from the simultaneous sale of a floor to finance the purchase of a cap is to open a position called a

• A)open interest.
• B)pull-to-par.
• C)cap.
• D)floor.
• E)collar.

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Definitions:

Z-statistic

A statistic used to determine the difference between an observed statistic and its hypothesized population parameter, measured in units of the standard deviation.

Two-tailed Test

A statistical test hypothesis that allows for the possibility of an effect in two directions, either greater than or less than.

Significant

In statistics, indicating that the results of an analysis are unlikely to have occurred purely by chance, at a specified level of probability.

Z-test

A method of statistical analysis that evaluates whether there is a significant difference between the means of two populations, given known variances and a large sample size.