The strategy whereby a company sells an interest rate option that puts a minimum level on how low an interest rate may fall is a:

Question

Quizplus · Accepted Answer

The strategy described is known as a floor option, which provides a minimum level of protection against declining interest rates. Choice A (boundary option) and choice D (perimeter option) are not commonly used terms in finance, and choice B (limit option) does not accurately reflect the specific strategy described in the question.

The Strategy Whereby a Company Sells an Interest Rate Option