Caps and Floors Are Used in Conjunction with Derivatives To

question 36

Multiple Choice

Caps and floors are used in conjunction with derivatives to:

• A)limit any impact from interest rate changes.
• B)increase the rate of return to the derivative holder.
• C)increase the volatility of the at-risk asset.
• D)offset the costs associated with establishing the derivative position.
• E)lower acquisition costs irrespective of financing costs.

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