Suppose Libor Caps and Floors at the Same Strike Rate

question 22

Multiple Choice

Suppose Libor caps and floors at the same strike rate are unequal in price.Suppose that,ceteris paribus,there is a sudden increase in interest-rate volatility.Which of the following statements is valid?

• A)Caps and floors will increase in value,but caps will increase by more than floors.
• B)Caps and floors will increase by the same amount.
• C)Caps and floors will increase in value,but caps will increase by less than floors.
• D)There is insufficient information to determine the answer.

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Definitions:

Global Brands

Are brands that have a widespread international presence, offering products or services across many countries with a consistent brand identity.

Multi-Cultural Collage

An approach to marketing that integrates diverse cultural elements and influences to appeal to a wide array of demographic segments.

Deterritorialization Framework

A theoretical concept often used in cultural studies and sociology that describes the process of diminishing the importance of physical location and boundaries in social and cultural practices.

Global Brands

Global brands are brands that are recognized and available across multiple countries, often with a consistent identity and marketing strategy.