Question: 6. Collared floater is a floating rate note that has both a floor and cap on the interest rate. Consider a 1.5-year collared floater that
6. Collared floater is a floating rate note that has both a floor and cap on the interest rate. Consider a 1.5-year collared floater that makes payment every six months according to the??rule: 3.5% If ?? < 3.5%, the interest payment of the collar floater on date ?? 1 is ???????? ?????????? . If 3.5% ???? 6.5% , the interest payment of the collar floater on date ?? 1 2 is ???????? ?????????? ????. 2 If ???? > 6.5%, the interest payment of the collar floater on date ?? 1 is ???????? ?????????? 6.5%. In addition, at maturity, the collared floater returns the $100 principal amount. 2 Using the risk-neutral tree derived for Question 5, price $100 face amount of the collared
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