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Interest rate cap profit diagram question

Suppose that you buy an interest rate cap on 3-month LIBOR with a 2-year maturity and simultaneously sell a floor on 3-month LIBOR with a 2-year maturity. Ignore the premiums.

Draw a profit diagram that indicates when you will gain or lose combined position. Compare this with different basic interest rate swap and futures positions.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92766972

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