Use 1 of Futures Contracts Fixing today the financial conditions of a loan or investment in...
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Use 1 of Futures Contracts Fixing today the financial conditions of a loan or investment in the future (Lock in the future price or the forward interest rate) Example 6: On 04/15/2015, a firm knows that it has to borrow $10 million on 06/15/2015 for a 6-month period. This firm sells 10 futures contracts maturing on 06/15/2015 where the underlying reference rate is the 6-month Libor and price 94. The contract size is $1 million. Now on 06/15/2015, the 6-month Libor is 7%. How much saving has the firm realized based on futures contract? (Day-count basis is Act/360) what is the firm's net financing cost for $10million over 6-months with Futures contract? Use 1 of Futures Contracts Fixing today the financial conditions of a loan or investment in the future (Lock in the future price or the forward interest rate) Example 6: On 04/15/2015, a firm knows that it has to borrow $10 million on 06/15/2015 for a 6-month period. This firm sells 10 futures contracts maturing on 06/15/2015 where the underlying reference rate is the 6-month Libor and price 94. The contract size is $1 million. Now on 06/15/2015, the 6-month Libor is 7%. How much saving has the firm realized based on futures contract? (Day-count basis is Act/360) what is the firm's net financing cost for $10million over 6-months with Futures contract?
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