When you’re determining whether an interest rate collar is going to payoff, you compare reference LIBOR to the strike prices, right? Not LIBOR + spread to the strike prices? In MM Exam 1 Question 40, the answer compares LIBOR + Spread to the strike price on the floor to calculate the payoff, and I think this could be wrong. Correct me if I’m mistaken.
i dont have access to the problem but
Libor + spread is used to compute for the interest on the loan, not the payoff on the option