elearning > Caps and floors

  

Learn about the following:

How caps work. How floors work. How caps and floors can be used. How collars work.

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Course Summary

• 20 minutes
• 8 question multiple choice
• How caps work
• How floors work
• How caps & floors can be used
• How collars work

Caps & Floors - the details

1. Interest rate caps

• How they work
• Price quote
• Premium, how much and who pays
• The risk for buyer and seller
• Potential payments for different Libor rates
• Hedging use

2. Interest rate floors

• How they work
• Price quote
• Premium, how much and who pays
• The risk for buyer and seller
• Potential payments for different Libor rates
• Hedging use

3. Interest rate collars

• Buying a cap and selling a floor
• Net affect, maximum and minimum borrowing cost
• Premium payments
• Zero cost structures
• Why customers use them & how dealers make money

4. Summary 

5. Test