The Zinn Company plans to issue $10,000,000 of 20-year bonds in June to help finance a...

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The Zinn Company plans to issue $10,000,000 of 20-year bonds in June to help finance a new research and development laboratory. The bonds will pay interest semiannually. It is now November, and the current cost of debt to the high-risk biotech company is 9%. However, the firm's financial manager is concerned that interest rates will climb even higher in coming months. The following data are available: Futures Prices: Treasury Bonds - $100,000; Pts. 32nds of 100% Delivery Open High Low Settle Change Month Open Interest (1) (2) (3) (4) (5) (6) (7) Dec 94'28 95'13 94'22 95'05 +0'07 591,944 Mar 96'03 96'03 95'13 95'25 +0'08 June 95'03 95'17 95'03 95'17 +0'08 120,353 13,597 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. X Open spreadsheet a. Use the given data to create a hedge against rising interest rates. Do not round intermediate calculations. Round your answer to the nearest whole number. contract(s) to cover the planned $10,000,000 June bond issue. The firm must sell b. Assume that interest rates in general increase by 300 basis points. How well did your hedge perform? (i.e., What is the net gain or loss?) Hint: Use settlement price in your evaluations. A net loss, if any, should be indicated with a minus sign. Use the rounded number of contracts in your calculations. Do not round other intermediate calculations. Round your answer to the nearest dollar. On net, the firm gained (lost) $ A The Zinn Company plans to issue $10,000,000 of 20-year bonds in June to help finance a new research and development laboratory. The bonds will pay interest semiannually. It is now November, and the current cost of debt to the high-risk biotech company is 9%. However, the firm's financial manager is concerned that interest rates will climb even higher in coming months. The following data are available: Futures Prices: Treasury Bonds - $100,000; Pts. 32nds of 100% Delivery Open High Low Settle Change Month Open Interest (1) (2) (3) (4) (5) (6) (7) Dec 94'28 95'13 94'22 95'05 +0'07 591,944 Mar 96'03 96'03 95'13 95'25 +0'08 June 95'03 95'17 95'03 95'17 +0'08 120,353 13,597 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. X Open spreadsheet a. Use the given data to create a hedge against rising interest rates. Do not round intermediate calculations. Round your answer to the nearest whole number. contract(s) to cover the planned $10,000,000 June bond issue. The firm must sell b. Assume that interest rates in general increase by 300 basis points. How well did your hedge perform? (i.e., What is the net gain or loss?) Hint: Use settlement price in your evaluations. A net loss, if any, should be indicated with a minus sign. Use the rounded number of contracts in your calculations. Do not round other intermediate calculations. Round your answer to the nearest dollar. On net, the firm gained (lost) $ A