CFA Practice Question

There are 227 practice questions for this study session.

CFA Practice Question

A payer swaption is a ______ option on a bond and a receiver swaption is a ______ option on a bond.

A. call; put
B. put; call
C. put; put
Correct Answer: B

User Contributed Comments 4

User Comment
danlan2 Remember payer=put receiver=call
rhardin Because bond prices move in opposite direction of interest rates. Tricky!
charomano Payer swaption => payer fixed => if rates goes up, he will be better of borrowing (selling bonds) => put option, the right to sell a bond

Receiver swaption => receiver fixed => if rates fall, he will be better of lending money (buying bonds) => call option, the right to buy a bond
ABYCAPRI Thanks charomano
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