What is the relationship between a cap and an option


Response to the following questions:

1. Explain why a swap is similar to a package of forward contracts.

2. Why would a corporate treasurer want to use a commodity swap to manage the price risk of a product it purchases?

3. What is the relationship between a cap and an option?

If possible, please give examples to better understand your answers.

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Accounting Basics: What is the relationship between a cap and an option
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