What payment would this lead to under the cap

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1. A company caps 3-month LIBOR at 10% per annum. The principal amount is $20 million. On a reset date, 3-month LIBOR is 12% per annum. What payment would this lead to under the cap? When would the payment be made?

2. Explain why a swap option can be regarded as a type of bond option.

Reference no: EM131240973

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