interest rate collar
Under a collar arrangement, both an interest rate cap and an interest rate floor are sold simultaneously. The buyer ensures that if interest rates move outside an agreed range, it will receive payment from the seller.
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Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • Interest Rate Collar — An investment strategy that uses derivatives to hedge an investor s exposure to interest rate fluctuations. The investor purchases an interest rate ceiling for a premium, which is offset by selling an interest rate floor. This strategy protects… …   Investment dictionary

  • Interest rate cap and floor — Interest rate c An interest rate cap is a derivative in which the buyer receives payments at the end of each period in which the interest rate exceeds the agreed strike price. An example of a cap would be an agreement to receive a payment for… …   Wikipedia

  • interest rate guarantee — (U.K.) Fin 1. an interest rate cap, collar, or cap and collar 2. a tailored indemnity protecting the purchaser against future changes in interest rates …   The ultimate business dictionary

  • collar — index handcuff Burton s Legal Thesaurus. William C. Burton. 2006 collar …   Law dictionary

  • Collar (finance) — In finance, a collar is an option strategy that limits the range of possible positive or negative returns on an underlying to a specific range. Contents 1 Equity Collar 1.1 Structure 1.2 Example 2 …   Wikipedia

  • Collar — An upper and lower limit on the interest rate on a floating rate note. The New York Times Financial Glossary * * *    A derivative instrument which fixes interest payments within a certain range by combining a long cap and a short floor. The… …   Financial and business terms

  • collar — / kɒlə/ noun 1. purchasing fixed minimum and maximum rates (‘floors’ and ‘caps’) of interest, dividends or repayments at the same time 2. ⇒ white collar COMMENT: If a company has money in variable rate investments and wants to protect its income …   Dictionary of banking and finance

  • collar — An arrangement in which both the maximum ( cap) and minimum ( floor) rate of interest payable on a loan are fixed in advance …   Accounting dictionary

  • collar — An arrangement in which both the maximum (cap) and minimum (floor) rate of interest payable on a loan are fixed in advance …   Big dictionary of business and management

  • cap and collar — ˌcap and ˈcollar noun [singular] 1. BANKING an agreement by a lender not to go above or below certain interest rates on a particular loan: • The mortgage lenders have introduced a cap and collar deal with an upper rate of 7.75% and a floor of… …   Financial and business terms

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