1. The Harold Co. plans to issue 20-year bonds in 6 months to help finance a new project. The current cost of debt to the company is9 percent.However, the company believes that interest rates will increase in the coming months.the company should consider entering into:

Group of answer choices

A long hedge because the value of futures contracts will fall

A long hedge because the value of futures contracts will rise

A short hedge because the value of futures contracts will fall.

A short hedge because the value of futures contracts will rise.

None of the above

2. The March CBOT Treasury bond futures contract has a quoted price of 97'12. If annual interest rates go up by 1.25 percentage point, what is the gain or loss on the futures contract? Round to the nearest whole dollar.

Group of answer choices

($8,499)

($12,619)

($21,214)

($22,995)

None of the above

3. The March CBOT Treasury bond futures contract has a quoted price of 115'09. What is the implied annual interest rate inherent in this futures contract?

Group of answer choices

4.12%

4.80%

6.00%

9.59%

None of the above

4. A swap is a method used to reduce financial risk. Which of the following statements is not correct?

Group of answer choices

A company can swap fixed interest payments for floating interest payments

A swap involves the exchange of cash payment obligations

A financial intermediary, who may or may not take the position of one of the counterparties, very often arranges swaps.

The earliest swaps were currency swaps, in which companies traded debt denominated in different currencies, e.g.,dollars and yen.

None of the above

5. Which of the following statements about forward and futures contracts is most correct?

Group of answer choices

Futures contracts don't have any margin requirements but forward contracts do.

Goods are never delivered under forward contracts, but are almost always delivered under futures contracts.

One advantage of forward contracts is that they are default free.

There are futures contracts for currencies but no forward contracts for currencies.

None of the above