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Would you be able to answer this to land a job? "All else being equal, what's worth more: a cap/floor straddle or a swaption straddle?" Why is your interviewer asking this? Well, they want to make sure you haven't just memorized a bunch of formulas that don't mean anything to you. You need to demonstrate an intuitive understanding of what drives valuation. An interest rate cap or floor at its core consists of a series of caplets and floorlets, meaning: you effectively own a portfolio of options.
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