Buying a cap is similar to
A)writing a call option on interest rates.
B)buying a call option on interest rates.
C)buying a put option on interest rates.
D)buying a floor on interest rates.
E)buying a collar on interest rates.

Question

Quizplus · Accepted Answer

Buying a cap is similar to buying a call option on interest rates because it allows the purchaser to benefit from interest rates rising above a certain level, just as a call option gives the holder the right to buy an asset at a set price within a specific period.

Buying a Cap Is Similar to