Assume that BHP plans to borrow $10 million in two months time using 180-day bank accepted bills and plans to use FRAs to hedge the interest rate risk. If 2 x 8 FRAs are being quoted at 4.65%, what is the gain (loss) on a hedging strategy using an FRA if the market rate of interest in two months time is 4.95%?

Group of answer choices

A. Gain of $7,225

B. Loss of $7,225

C. Gain of $14,119

D. Loss of $14,119

Suppose that it is 20 April and a lender realises that on 14 September it will have $5 million to invest for a period of 180 days. The lender is concerned that the Reserve Bank of Australia will lower interest rates before 14 September. 90 Day BAB futures deliverables on 14 September are currently quoted at 95.50. What is the dollar gain or loss on your hedging strategy if the 90-day BAB futures settlement rate is 96.05 at the expiry of the futures contract on 14 September?

Group of answer choices

A. Profit of $13283

B. Profit of $6642

C. Loss of $6642

D. Loss of $13283

If a trader creates a Put Butterfly Spread using 3800, 3600 and 3400 strike prices of ASX200 index, which costs 370, 280 and 210 respectively, what would be the max gain from this strategy. The value of one index point is $25.

Group of answer choices

A. Gain of $4500

B. Gain of $200

C. Gain of $4800

D. Gain of $18