LU 111m ADJ Question 6 (i) What is meant by a Eurodollar? [2 marks] (ii) Discuss the reasons why the offshore Eurodollar market has more competitive deposit and loan rates than the deposit and loan rates for large dollar deposit and loan transactions in the United States. [5 marks] (iii) From the data below calculate the TED Spread 1 month 3 month 6 month US Treasury Bills 4.0% 4.5% 5.00% $LIBOR 4.5% 5.2% 5.80% [1 mark] (iv) What is likely to happen to the TED spread if there is major turmoil in the nancial markets such as the collapse of a major investment bank? [2 marks]