Interest Rate Floor
Forward Rate
Interest
PSSIB's Interest Rate Floor
How Interest Rate Floor Works?
Suppose the current month is May.
There are two scenarios that possibly occurs when company A agrees on the agreement with PSSIB.
If the Floating Rate on June is at 7.5 percent, which is lower than the Floor Rate
If the Floating Rate on June 1 is at 9 percent, which is exceeds the Floor Rate
- a contractual agreement on the lowest acceptable interest rate with regards to a reference interest rate for a specific period and an agreed volume.
- an agreement that were designed for investors to hedge against decreasing interest rates.
How Interest Rate Floor Works?
Suppose the current month is May.
There are two scenarios that possibly occurs when company A agrees on the agreement with PSSIB.
If the Floating Rate on June is at 7.5 percent, which is lower than the Floor Rate
If the Floating Rate on June 1 is at 9 percent, which is exceeds the Floor Rate
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