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Problem 3 These are the current euro FRA quotations FRA 3X6 3X9 6X12 BID 3.42 3.30 3.36 ASK 3.46 3.34 3.40 a) A company knows

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Problem 3 These are the current euro FRA quotations FRA 3X6 3X9 6X12 BID 3.42 3.30 3.36 ASK 3.46 3.34 3.40 a) A company knows it will have to issue lm euro 6-months debt in 6 months, and wants to hedge against interest rate movements. What should it do? After 6 months the spot rate is 4%. Which payment will the company make or receive? b)

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