Define interest rate cap, floor and collar. Describe the cash flows for these derivatives.
Define interest rate cap, floor and collar. Describe the cash flows for these derivatives.
Homework Answers
Interest rate cap is a contract in which buyer will recieve cash flow at the end of each period if the interest rate exceeds strike price.
CASH FLOW - If market rates exceed the ceiling or cap rate, then the provider of the cap will make payments to the buyer sufficient enough to bring its rate back to the ceiling level. When rates are below the ceiling, no payments are made and the borrower pays market rates.
Interest rate floor is a contract in which buyer will recieve cash flow at the end of each period if the interest rate is below strike price.
CASH FLOW - If market rates is below the floor rate, then the provider of the floor will make payments to the buyer sufficient enough to bring its rate back to the floor level. When rates are above the floor, no payments are made and the investor invest at market rates.
Interest rate collar is a simultaneous buying of cap and floor contract in which buyer will recieve cash flow at the end of each period if the interest rate is above the cap strike or below the floor strike price. when interest rate are in between no payments are made
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Define interest rate cap, floor and collar. Describe the cash
flows for these derivatives.
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Assuming an interest rate of 5.6 percent, what is the value of
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Assuming an interest rate of 5.3 percent, what is the value of the following cash flows...
Assuming an interest rate of 5.3 percent, what is the value of the
following cash flows four years from today?
Assuming an interest rate of 5.3 percent, what is the value of the following cash flows four years from today? کا یہ Cash Flow $2,975 4,020 5,860 7,945 بیا هم Multiple Choice 22.46762 $21.164.67 $23.463.76 $22965.69 $2204653
Calculate the PV of a series of cash flows at 5% interest rate per annum. The...
Calculate the PV of a series of cash flows at 5% interest rate per annum. The series of cash flows are as follows: $1,500 today, $2,500 at the end of period 1, $3,500 at the end of period 2, and $4,800 at the end of period 3.
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Assuming an interest rate of 5.6 percent, what is the value of
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