A cap is equivalent to:
A) A package of forwards.
B) A package of call options.
C) A package of put options.
D) Complex options.
E) None of the above.

Name: A cap is equivalent to: A) A package of forwards. B) A package of call options. C) A package of put options. D) Complex options. E) None of the above.
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Question

Quizplus · Accepted Answer

A cap is equivalent to a package of call options on interest rates. It sets a maximum (cap) on the interest rate the buyer will have to pay.

A Cap Is Equivalent To