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Interest Rate Contingent Option
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An option on an equity, physical commodity or foreign exchange rate that is contingent upon a particular interest reference rate being above or below a certain level, or within a certain range. For example, an investor might buy a call on a stock index with the right to exercise the call contingent on a LIBOR rate being above a designated level at expiration of the option. Generically a Contingent Payout Option (diagram).
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Glossary *
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