Suppose that you buy an interest rate cap on three month LIBOR with a two year maturity and simultaneously sell a floor on three month LIBOR with a two year maturity Ignore the premiums Draw a profit diagram that indicates when you will gain and lose on the combined positions Compare this with diff...

The simultaneous purchase of an interest rate cap and sale of an inter ...

Suppose that you buy an interest rate cap on three month LIBOR with a two year maturity

Question:

Suppose that you buy an interest rate cap on three month LIBOR with a two year and simultaneously sell a floor on three month LIBOR with a two year Ignore the premiums. Draw a profit diagram that indicates when you will gain and lose on the combined positions. Compare this with different basic interest rate swap and futures positions.
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...