Suppose you expect to borrow $50 million on March 18, 2016 at LIBOR + 120bp. You will
Fantastic news! We've Found the answer you've been seeking!
Question:
Suppose you expect to borrow $50 million on March 18, 2016 at LIBOR + 120bp. You will have to pay back the loan in three months. Today is December 1st. Given the futures prices below, how would you go about hedging your exchange rate risk and what would your net cost of borrowing be in annual percentage terms if LIBOR on March 18, 2016 is 6%? Maturity Price Jan ’16 95.4550 Mar ’16 95.8100 Jun ’16 96.2550..
Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Posted Date: