QUESTION 16 6 points Save Answer Suppose on Jun 5, 2017, a MNC expects to receive $20,000,000 in cash on Dec 18 2017. The money will not be needed for a period of 90 days. Thus the MNC should invest the excess funds for this period in a money market instrument such as Eurodollar deposit. Suppose the quotation for Dec 2017 is 99.750, and the treasurer expects the 3-month LIBOR rates to increase and believes that a 90-day rate of return of 0.250% is a decent rate to "lock in". So, he decides to hedge against lower 3-month LIBOR in Dec 2017. a. What should the treasurer do to hedge against the interest rate risk? b. Assume that on the last day of trading in the Dec 2017 contract 3-month LIBOR is 0.15%. What would be the profit or loss? c. Now assume that on the last day of trading in the Dec 2017 contract, 3-month LIBOR is 0.30%. What would be the profit or loss for the treasurer?QUESTION 1 6 points Save Answer SHK, Inc. can borrow euros for 5 years at a coupon rate of 1.95%. Alternatively, it can borrow dollars for 5 years at a rate of 1.85%. The 5-year euro swap rates are 1.75-1.85% and the dollar swap rates are 2.50-2.60%. The exchange rate is SO($/E) = $1.30/E. a. Determine the dollar cash flow that SHK would have to pay under a currency swap where it borrows $50,000,000 and swaps the debt service into euros. b. Determine the euro AIC. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt V A V TX 6 E . . . X2 X2 - + ABC X EX: O (?) + P O WORDS POWERED BY TINY