Interest rate floor: Difference between revisions
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imported>Doug Williamson m (Category added 9/10/13) |
imported>Doug Williamson (Align with qualifications material.) |
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An | 1. | ||
An option which pays out to the holder if the reference interest rate falls below the strike rate on the maturity date, or on a series of pre-agreed dates. | |||
The effect of hedging interest income with a floor is to establish a minimum level for the hedged interest income achieved. | |||
2. | |||
The hedged interest income profile achieved by the use of an option in combination with an underlying interest income exposure. | |||
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* [[Floor]] | * [[Floor]] | ||
* [[Interest rate]] | * [[Interest rate]] | ||
* [[Interest rate cap]] | |||
* [[Interest rate collar]] | |||
* [[Interest rate guarantee]] | |||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
Latest revision as of 08:57, 1 August 2015
1.
An option which pays out to the holder if the reference interest rate falls below the strike rate on the maturity date, or on a series of pre-agreed dates.
The effect of hedging interest income with a floor is to establish a minimum level for the hedged interest income achieved.
2.
The hedged interest income profile achieved by the use of an option in combination with an underlying interest income exposure.
