SFM Doubt

This query is : Resolved 

09 May 2011 Sir
wat is the difference b/w swaption & CAP option ?

09 May 2011 Swaption: It is the combination of swap and option.It gives the party of the swap an option to exercise the contract only if that meets the predecided conditions.

CAP option: Its similar to swaption but the difference is it is taken to protect the upside movement of the interest rate curve. Unlike swaption, a premium is charged by the writer of option.



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