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Commercial Banking. You are a corporate account officer with TLTF (Too Large To 100 Fail) Bank. One of ar major clients just sold a piece

Commercial Banking. You are a corporate account officer with TLTF ("Too Large To 100 Fail") Bank. One of ar major clients just sold a piece of customized machinery to be delivered in one year's time. The company's CFO inquires about the possibilities of investing USD 10 m in a year from now for one year. (a) What kind of investment opportunity (contract) would they get? 3 (b) Currently, 1-year and 2-year spot rates are 6.50% and 7.25%, respectively. What is the return for the preceding investment. Since customer is old af (c) What alternative investments could thecustomer? (d) what is the forward curve. Why or why not is it a good predictor of future interest rates?

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