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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Interest rate Options
Dear Tutor,
I have slight confusion on interest rate option, as it is bit different than a usual option.
Suppose if we are borrower and on the loan start date the actual future price we calculate turns out to be greater than the strike price, we do still calculate the loss on option, right?
No. If exercising the option would result in a loss then it won’t be exercised.
Thanks John, makes it clear now.
You are welcome 🙂