Interest rate option

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Revision as of 15:09, 22 August 2013 by imported>Doug Williamson (Spacing 22/8/13)
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(IRO).

An option relating to interest rates.

Historically this was the right but not the obligation to borrow/lend a specified amount at a specified rate for a specified period.

More commonly in practice the option is cash-settled based on the difference between the option strike rate and the current market rate.


See also