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can you help me with this question ? that's all the information that is given in the question ... there is no more further information
can you help me with this question ?
that's all the information that is given in the question ... there is no more further information
company wishes to use financial futures to hedge its interest rate exposure. The company will sell 10 Treasury futures contracts at $9.5k per contract. It is Jul and the contracts must be closed out in Dec of this year. Long-term interest rates are currently 13.21%. If they increase to 14.78%, assume the value of the contracts will go down by 8.4%. Also if interest rates do increase by 1.86%, assume the firm will have additional interest expense on its business loans and other commitments of $5.6k. This expense will be separate from the futures contracts. Note: The term "K" is used to represent thousands (* $1,000). Required: What percent of this $5.6k cost did the company effectively hedge away? % Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%). A company wishes to use financial futures to hedge its interest rate exposure. The company will sell 10 Treasury futures contracts at $9.5k per contract. It is Jul and the contracts must be closed out in Dec of this year. Long-term interest rates are currently 13.21%. If they increase to 14.78%, assume the value of the contracts will go down by 8.4%. Also if interest rates do increase by 1.86%, assume the firm will have additional interest expense on its business loans and other commitments of $5.6k. This expense will be separate from the futures contracts. Note: The term "k" is used to represent thousands (* $1,000). Required: What percent of this $5.6k cost did the company effectively hedge away? % Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%) Step by Step Solution
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