Its end of September now and Middleton Bank's Commercial Deposits (CD) would be maturing in three months and intends to issue a 180 - day banker accepted bills amounting to AUD150 million. Middleton Bank decides to use 180-day futures contract to hedge against the interest rate exposure. The futures contract is currently trading at 93.60. Current rate quoted is 6.1% per annum. Six months later in March when the bank closes out its futures position, the contract is trading at 92.80 and the bank issues banker accepted bills at a rate of 7.30% per annum. (Contract size = AUD 1,000,000/contract.) (a) State four (4) distinguishing features of a Futures Trading exchange as opposed to a trade Over the Counter (OTC)? (4 Marks) (b) Determine the number of banker accepted bill future contracts to transact in this hedging process and indicate which position to take in the futures market. (2 Marks) Show the strategies taken by the manager to hedge the interest rate exposure and calculate the effective the interest cost to the bank on this short-term debt (show all calculations). (4 Marks) (c) (d) Is this a perfect hedge? Why? (2 Marks) Its end of September now and Middleton Bank's Commercial Deposits (CD) would be maturing in three months and intends to issue a 180 - day banker accepted bills amounting to AUD150 million. Middleton Bank decides to use 180-day futures contract to hedge against the interest rate exposure. The futures contract is currently trading at 93.60. Current rate quoted is 6.1% per annum. Six months later in March when the bank closes out its futures position, the contract is trading at 92.80 and the bank issues banker accepted bills at a rate of 7.30% per annum. (Contract size = AUD 1,000,000/contract.) (a) State four (4) distinguishing features of a Futures Trading exchange as opposed to a trade Over the Counter (OTC)? (4 Marks) (b) Determine the number of banker accepted bill future contracts to transact in this hedging process and indicate which position to take in the futures market. (2 Marks) Show the strategies taken by the manager to hedge the interest rate exposure and calculate the effective the interest cost to the bank on this short-term debt (show all calculations). (4 Marks) (c) (d) Is this a perfect hedge? Why? (2 Marks)