Interest Rate Option Strategies

CFA Level II Derivatives
#1

Any help simplifying/breaking down the below question would be appreciated. Just having a hard time wrapping my head around the reasoning Kaplan provides.

A LIBOR based floating rate bond combined with a LIBOR based collar (a short position in an interest rate cap and a long position in an interest rate floor both at the same strike rate) is equivalent to a;

A. Pay-fixed swap position

B. Fixed-rate bond

C. Call option on a bond

Explanation: The effective rate above the cap strike and below the floor strike, when combined with the floating rate on a bond, is constant.

#2

The key is that the strike prices on the cap and the floor are the same. If the rate on the floater is less than that strike rate, the floor will pay you the difference; if the rate on the floater is more than that strike rate, the cap will require you to pay the difference. So either way you net the strike rate: you have a fixed-rate bond.