Question: Please answer each question with 2 paragraphs 5. What is the difference between an indicative rate (like LIBOR) and a transaction rate (like the Secured

Please answer each question with 2 paragraphs

Please answer each question with 2 paragraphs 5. What is the difference

5. What is the difference between an indicative rate (like LIBOR) and a transaction rate (like the Secured Overnight Financing Rate [SOFR])? As we discussed in class, LIBOR will no longer be an acceptable reference rate. Currently LIBOR is used in both the Eurodollar futures contract and interest rate swaps. What is the advantage of the current use of LIBOR in both the futures contract and interest rate swaps? What issues should guide regulators as they choose an alternative rate? 6. What is an optimal hedge and how do we calculate it? What is the dollar offset ratio (DOR) and how do we calculate it? How do we decide if we should implement a hedge? 5. What is the difference between an indicative rate (like LIBOR) and a transaction rate (like the Secured Overnight Financing Rate [SOFR])? As we discussed in class, LIBOR will no longer be an acceptable reference rate. Currently LIBOR is used in both the Eurodollar futures contract and interest rate swaps. What is the advantage of the current use of LIBOR in both the futures contract and interest rate swaps? What issues should guide regulators as they choose an alternative rate? 6. What is an optimal hedge and how do we calculate it? What is the dollar offset ratio (DOR) and how do we calculate it? How do we decide if we should implement a hedge

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