Liability Driven Investing - CFAI Vol 4 R22 page 86 example 7

CFA Level III Fixed Income
#1

Hi There, I have some problem with understanding the conclusion to thie example

[question removed by moderator]

Do not understand that part of preference of receiver swaption:

The purchased receiver swaption will be preferred only if the swap rate is expected to be somewhat above 4.25%, the strike rate on the written payer swaption

Receiver swaption is put on interest rates so it becomes ITM below 3.60%. Can some of yoy guys can help me here?

#2

ok I understood, after the small break.Yet the receiver swaption in that example just limits the loss it established a bottom for the loss while collar generates unlimited loss above 4.25% SFR.