caps

An interest rate cap is fixing a maximum interest rate. Buying put options is a way of creating a cap. In the context of exam questions they are effectively the same, but speculators also use put options as a way of 'gambling' rather than buying them for the purpose of creating a cap. The paragraph you quoted is correct (although is much more detailed than anything required in an exam answer).

I read too fast :-) Yes - you are correct. If borrowing money then we need a cap and this is achieved by buying put options - not call options.