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