Page 308 Book 6 CFAi: Long Cap = buying a package of PUTS on a fixed income instrument Long Floor = buying a package of CALLS on a fixed income instrument --------------------------------------------------------- I thought it was the other way around.
long interest cap -> long series of caplets -> long interest rate -> short bond -> long put on a bond
is that a yes or a no?
maratikus Wrote: ------------------------------------------------------- > long interest cap -> long series of caplets -> > long interest rate -> short bond -> long put on a > bond Letters, He is saying when you are long an interest rate cap you are long a series of caplets. This means that you are long interest rates. This is the same as being short a bond because they act inversely to interest rates. Therefore it is like you are long a put on a bond.
ahhhhhh…I see the light.
3_letters Wrote: ------------------------------------------------------- > ahhhhhh…I see the light. No more darkness no more night…Praise the lord 3_Letters saw the light.