The strategy whereby a company buys an interest rate option that puts a maximum level on the interest rate for its borrowing is a:

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The buying of an interest rate option that puts a maximum level on the interest rate for borrowing is known as a cap option. It is used as a form of hedging against fluctuations in interest rates. This option allows the company to limit its exposure to rising interest rates while still benefiting from lower rates. It is similar to a ceiling option or limit option, but in this case, the cap option refers specifically to an interest rate cap.

The Strategy Whereby a Company Buys an Interest Rate Option