Question: II Interest Rate hedging Current date is 1/5/24. You're a wind turbine manufacturer who plans to borrow funds for operations starting in Mar 2024. You

II Interest Rate hedging Current date is 1/5/24. You're a wind turbine manufacturer who plans to borrow funds for operations starting in Mar 2024. You intend to repay the loan 3 months later in Jun 2024. Your bank agrees to a loan rate of 3M LIBOR plus 155 basis points (3M LIBOR +1.55%). That is, your bank sets the interest rate to 3M LIBOR on the day you take out the loan (Mar 1, 2024) adding 1.55% to the LIBOR baseline. Today 1/5/24 You're unsure what rate you will be exposed to in Mar '24 so.. You want to lock in the rate today 1/5/24 that the ED futures price corresponds to, you do not want to wait until Mar 1, 2024 to find the rate to borrow on your loan Find 1 ED future contract is for how many Eurodollars? How many futures contracts do you need? Are you short or long the ED futures? Suppose that when you file for the loan and then hedge its forward interest rate exposure today 1/5/24, the Mar 2024 expiration ED futures market price is 98.65 Find the 3 month forward LIBOR rate implied by the Mar 2024 delivery contract price on

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