Question
The December Eurodollar futures contract is quoted as 98.40 and a company plans to BORROW $6 million for three months starting in December at LIBOR
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The December Eurodollar futures contract is quoted as 98.40 and a company plans to BORROW $6 million for three months starting in December at LIBOR plus 0.5%.
(a) What rate can the company lock in by using the Eurodollar futures contract? Enter your answer as a % to 2 decimal places. Do not include the % sign.
(b) What position should the company take in the contracts? i.e. short/long and number of contracts
Enter Long or Short -->
Enter Number of contracts to Long or Short as a whole number -->
(d) If the actual three-month LIBOR rate turns out to be 1.3%, what is the final settlement price on the futures contracts.
The December Eurodollar futures contract is quoted as 98.40 and a company plans to BORROW $6 million for three months starting in December at LIBOR plus 0.5%.
(a) What rate can the company lock in by using the Eurodollar futures contract? Enter your answer as a % to 2 decimal places. Do not include the % sign.
(b) What position should the company take in the contracts? i.e. short/long and number of contracts
Enter Long or Short -->
Enter Number of contracts to Long or Short as a whole number -->
(d) If the actual three-month LIBOR rate turns out to be 1.3%, what is the final settlement price on the futures contracts.
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Behavioral Finance And Investor Types
Authors: Michael M. Pompian
1st Edition
1118011503, 978-1118011508
