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The Writer of an Interest Rate Floor Contract

Question 17

Multiple Choice

The writer of an interest rate floor contract:


A) has the obligation to buy the underlying bond at a fixed price
B) has the obligation to sell the underlying bond at a fixed price
C) has the obligation to pay (the strike rate minus the spot rate) times the notional
D) has the obligation to pay (the spot rate minus the strike rate) times the notional in case it's a positive number
E) has the obligation to pay (the strike rate minus the spot rate) times the notional in case it's a positive number

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