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Surfs - Up Security Savings is considering the problem of trying to raise $ 8 0 million in money market funds to cover a loan

Surfs-Up Security Savings is considering the problem of trying to raise $80 million in money market funds to cover a loan request from one of its largest corporate custom-ers, which needs a six-week loan. Assume that market interest rates are at the levels indicated below: Federal funds, average for week just concluded1.98%Discount window of the Federal Reserve Bank2.25CDs (prime rated, secondary market):One month2.52Three months2.80Six months3.18Eurodollar deposits (three months)3.00Commercial paper (directly placed):One month2.33Three months2.70 Unfortunately, Surfs-Ups economics department is forecasting a substantial rise in money market interest rates over the next six weeks. What would you recommend to its funds management department regarding how and where to raise the money needed? Be sure to consider such cost factors as legal reserve requirements, regula-tions, and what happens to the relative attractiveness of each funding source if inter-est rates rise continually over the period of the proposed loan.Alternative scenario: What if Surfs-Ups economists are wrong and money market rates decline significantly over the next six weeks? How would your recommendation to the funds management department change on how and where to raise the funds needed?

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