Buying a cap is similar to
A)writing a call option on interest rates.
B)buying a call option on interest rates.
C)buying a put option on interest rates.
D)buying a floor on interest rates.

Question

Quizplus · Accepted Answer

Buying a cap is similar to buying a call option on interest rates because it provides protection against rising interest rates, allowing the buyer to benefit if rates exceed a certain level.

Buying a Cap Is Similar to