A Reverse Collar Consists Of

question 54

Multiple Choice

A reverse collar consists of:

• A) buying an interest rate floor and an interest rate cap.
• B) buying an interest rate floor and selling an interest rate cap.
• C) selling an interest rate floor and buying an interest rate cap.
• D) buying a call option and selling a futures contract.
• E) selling a put option and buying a futures contract.

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Definitions:

Actual Authority

The explicit power granted by a principal to an agent to act on their behalf.

Gratuitous Agent

An individual who acts on behalf of another without receiving any compensation or benefit, motivated by voluntary intent or relationship.

Duty of Loyalty

An obligation of an individual, such as a director of a company, to act in the best interests of the company or another person, without personal conflict.

Fiduciary

A person or organization that acts on behalf of another person or persons, putting their clients' interest ahead of their own, with a duty to preserve good faith and trust.