This Case is about Finance, International
Publication Date: 01/01/1990
The options are comprised of interest rate COLLARs, CAPs, and SWAPs. What’s the best hedging construction? Should CRP hedge all its floating rate debt, or just the sum demanded under the loan agreement? (A Microsoft Excel spreadsheet is available to be used with this event, merchandise 7A90B037.)
Learning Objective: The goals of this instance are to introduce the following: interest rate risk management through using the financial markets, interest rate derivatives that are SWAPs, limitations and COLLARs as well as interest rate traditions, which are LIBOR, Prime, U.S., Canada, and Euro.