Interest rate collar

1.

A combination of two options used to hedge interest expense or interest income. The effect of the collar is to establish upper and lower hedged limits, within which the hedged interest expense or income is bounded.

2.

The profile of hedged interest expense or income achieved by the combination of two hedging options together with an underlying interest expense or income exposure.

See also

• Cap
• Collar
• Floor
• Interest rate cap
• Interest rate floor