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An interest rate collar has a cap strike rate of 10.00% and a floor strike rate...

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Finance

An interest rate collar has a cap strike rate of 10.00% and afloor strike rate of 9.50%. If the reference interest rate movesfrom 9.50% to 9.75%, what is the effective rate of the collar? a.9.50% b. 9.625% c. 9.75% d. 9.875%

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Answer is C 975 In the given problem the collar has a Cap rate with strike rate of10 and a floor strike rate of 95 Implication of Cap Rate If the Reference Rate Moves higher than the Strike price of 10 the interest    See Answer
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