Assuming it is 1 st June today, and consider your corporation need to borrow $500,000,000 for 3

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Assuming it is 1^st June today, and consider your corporation need to borrow $500,000,000 for 3 months from 1^st September to 30^th November. The prevailing fixed agreement rate is 5.00% p.a. while the Floating Libor rate could be 5.75% on 1^st September. Assuming there are 92 days between September 1 and November 30, and use actual / 360 convention.You are assigned by your CFO to evaluate the cheapest net cost of interest for this 3 month borrowing for each of the following interest rate hedge instrument:

a)FRA contract

b)Eurodollar Futures

c)BAB Futures

d)Which hedge instrument provides the cheapest cost of interest?

Posted Date: May 17, 2024 04:11 PM

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Assuming it is 1 st June today, and consider your corporation need to borrow $500,000,000 for 3

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