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A Floating-Rate Borrower Wants to Use a Collar as a Hedge

Question 20

Multiple Choice

A floating-rate borrower wants to use a collar as a hedge. Which of the following is appropriate?


A) Buy a cap and sell a floor
B) Buy a cap and buy a floor
C) Sell a cap and sell a floor
D) Sell a cap and buy a floor

Correct Answer:

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