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A company wishes to borrow 3,488,000 in 30 days time for a period of 60 days. Euro-denominated money market rates are: 30-day interest rate spread
| A company wishes to borrow | 3,488,000 | in 30 days time for a period of 60 days. | ||||
| Euro-denominated money market rates are: | ||||||
| 30-day interest rate spread | 0.60% - 0.70% | |||||
| 90-day interest rate spread | 0.80% - 0.90% | |||||
| Assume that one year consists of 365 days. | ||||||
| Required | ||||||
| Explain the interest rate risk facing the borrower. | ||||||
| Outline the terms of a money market hedge and calculate the forward rate | ||||||
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Fundamentals Of Corporate Finance
Authors: David W Blackwell, Robert Parrino, David S Kidwell
1st Edition
0471270563, 9780471270560
