An interest rate guarantee (IRG) is an
option
Option or Options may refer to:
Computing
*Option key, a key on Apple computer keyboards
*Option type, a polymorphic data type in programming languages
*Command-line option, an optional parameter to a command
*OPTIONS, an HTTP request method
...
on a
forward rate agreement (FRA) that is handled
over-the-counter (OTC).
A
call IRG is called a ''borrower's IRG''. A
put IRG is called a ''lender's IRG''. As with all options, the seller has the obligation to fulfill the condition of the option.
*When exercising a borrower's IRG, the holder has the option (but is not obliged) to take a loan with a predetermined amount at a predetermined interest rate (the
strike of the option) on a predetermined time period.
*When exercising a Lender's IRG, the holder has the option (but is not obliged) to make a loan with a predetermined amount at a predetermined interest rate (the
strike of the option) on a predetermined time period.
External links
accaglobal.com
{{DEFAULTSORT:Interest Rate Guarantee
Options (finance)
Fixed_income_analysis
Interest_rates