Question

The writer of a ____ agreement makes settlement payments when LIBOR is less than the striking rate of the agreement.

A. Swap
B. Cap
C. Floor
D. Collar
E. None of the above

Answer 1

The writer of a cap agreement makes settlement payments when LIBOR is less than the striking rate of the agreement.

Step-by-step explanation:

The writer of a cap agreement makes settlement payments when LIBOR is less than the striking rate of the agreement.