you have 2 interest rate caps that you can buy 3.5% cap at a price of 2,000,000 3.65% cap at a price of 2,200,000 the Schweser guys buy the 3.65 cap would not it be better to but the 3.5 cap? first it is more likely to pay back since it starts paying when rates go above 3.5 vs 3.65, and it is also cheapers ???
never mind the question, i did not notice that the 3.5 cap does not match the time horizon.
I don’t have the book in front of me but aren’t there years on there? You have to pick the 2-year one or something. I’ll check later
thanks andrew, you do have to pick teh 2 year one, i did not notice the years, i thought they were swap numbers, ie swap 1, swap 2, loool