Question
One-Punch man needs 29 million in 2 months for a 8-month period to finance a sushi restaurant in City Z. He wants to lock in
One-Punch man needs 29 million in 2 months for a 8-month period to finance a sushi restaurant in City Z. He wants to lock in the rate for a Euroyen loan over the borrowing period today. The current 2-month annualized Euroyen loan rate is 7.7% and the 10-month annualized Euroyen loan rate is 8.855%. What is the interest rate (annualized) One-Punch man can lock in based on these rates through money market transactions? Suppose the Bank of Hero Association offers a forward forward that fixes the loan rate at 7.5232433766661%, should One-Punch man take this contract? (Please choose ONE answer from Options (a) - (d) and ONE answer from Options (e) - (f) or choose (g) if you cannot find the right answers.) Select one or more:
a. 9.028% b. 8.515% c. 1.609% d. 6.019%
e. Yes, One-Punch man should go for the forward forward contract with the Bank of London
f. No, One-punch man should lock in a rate through money market transactions
g. Not enough information
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