Sep/Dec 15 hybrid paperForums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Sep/Dec 15 hybrid paperThis topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.Viewing 2 posts - 1 through 2 (of 2 total) AuthorPosts February 5, 2016 at 3:13 pm #299391 RobertMemberTopics: 58Replies: 175☆☆☆Hi john, in this paper question 2 the question asked to hedge a deposit using options. It then asked to hedge using a collar.May I ask as the depositor was therefore limiting upside interest rates – this transaction should be termed a cap rather than a collar?Many thanks February 6, 2016 at 8:29 am #299444 John MoffatKeymasterTopics: 56Replies: 53816☆☆☆☆☆Limiting the maximum rate is indeed a cap, but limiting a minimum rate is a floor.Limiting both at the same time is a collar.You will find explanation of collars in the free lectures and in addition there is an extra note explaining them as well.AuthorPostsViewing 2 posts - 1 through 2 (of 2 total)You must be logged in to reply to this topic.Log In Username: Password: Keep me signed in Log In