Question
Tiger Bank currently owns $2.5 million in U.S. Treasury bonds that mature in the year 2035. The bank has plans of selling the securities in
Tiger Bank currently owns $2.5 million in U.S. Treasury bonds that mature in the year 2035. The bank has plans of selling the securities in one years time and is concerned about future interest rates increasing. (1) What kind of risk is this bank exposed to? (2) Explain how Tiger Bank can use forward contracts to hedge this risk. (3) How does the counterparty in this transaction benefit?
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Project Finance In Theory And Practice Designing Structuring And Financing Private And Public Projects
Authors: Stefano Gatti
4th Edition
032398360X, 9780323983600
