Q28
An interest rate cap is a series of
A.
Call options
AnswerB.
Put options
C.
Periodical payments
D.
Differential payments
Answer: Option A
Solution
Answer: Option A
Solution:
An interest rate cap is a series of Call options. Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period.