Thanks, ChiTown, that question is driving me nuts. So basically, to form a cap, You buy a series of call on interest rate. The price of the call will rise if rate rise to offset the additional interest you need to paid.
Thanks, ChiTown, that question is driving me nuts. So basically, to form a cap, You buy a series of call on interest rate. The price of the call will rise if rate rise to offset the additional interest you need to paid.