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Redwater.com issued $10,000 of debt on January 1, 2014 when mkt rate was 10% Interest is payable each quarter starting on March 31, 2014 The
| Redwater.com issued $10,000 of debt on January 1, 2014 when mkt rate was 10% | |||
| Interest is payable each quarter starting on March 31, 2014 | |||
| The note is due on September 30, 2014. | |||
| Exercise #1 | |||
| The debt has a FLOATING (market) rate | |||
| Redwater wants to fix the interest payments | |||
| Redwater designates the interest rate swap as a hedge | |||
| Question 1 - How would Redwater effectively lock the interest at 10%? | |||
| Question 2 - Would this be a Fair Value Hedge or cash flow hedge? | |||
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Financial And Managerial Accounting
Authors: John J. Wild
9th Edition
1260728773, 9781260728774
