A futures option whose underlying is a specific interest rate. The holder of such an option, by exercising it, obtains a position in the underlying futures contract. In addition to that position, a cash payoff is made to settle the futures. Interest rate futures increase in value when interest rates fall and decrease in the opposite case.
Derivatives
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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