An interest rate collar sets both,a minimum and a maximum interest rate on a variable rate loan agreement.

Question

Quizplus · Accepted Answer

An interest rate collar is a financial derivative that sets a range for the fluctuation of interest rates on a variable rate loan agreement, where both a minimum and a maximum limit are established to protect against interest rate fluctuations. Therefore, a collar does set both a minimum and a maximum interest rate.

An Interest Rate Collar Sets Both,a Minimum and a Maximum