The Payoff of a Long Interest Rate Floor Is Equivalent

question 30

True/False

The payoff of a long interest rate floor is equivalent to the payoff of a short receiver swaption.

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Definitions:

Service Revenue

Represents the income earned by a company from its business activities, such as the sale of services, before any expenses are deducted.

Fair Market Value

The price at which an asset would trade in a competitive auction setting.

Sam, Capital

An account representing the owner's (Sam's) equity or ownership interest in a business.

Profit and Loss Ratio

An indicator that measures the ratio of profits earned to losses incurred over a particular period, often used to assess a company's financial health.