You would like the right to purchase an interest rate cap in the future. To obtain this right, you should purchase a:
A) floor.
B) swap.
C) caption.
D) collar.
E) hat.

Question

Quizplus · Accepted Answer

A caption is an option to purchase an interest rate cap in the future, providing the right but not the obligation to enter into an interest rate cap agreement at predetermined terms.

You Would Like the Right to Purchase an Interest Rate