An interest rate collar represents the ____ of an interest rate cap and a simultaneous ____ of an interest rate floor.

Question

Quizplus · Accepted Answer

An interest rate collar involves purchasing an interest rate cap and simultaneously selling an interest rate floor. This strategy is used to limit the exposure to interest rate fluctuations by establishing both an upper and lower limit on the interest rate. Therefore, choice D is the correct answer.

An Interest Rate Collar Represents the ____ of an Interest