Your company has a future borrowing requirement in the amount of approximately $50 million. Following the...

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Your company has a future borrowing requirement in the amount of approximately $50 million. Following the company's hedging policy, you decide to hedge 60% of its interest rate exposure using IR futures and open a short position in June22 IR contracts priced at 98.6. Assume that in early June 2022, you close out the position with a long trade in the same contract, when the June22 IR contracts are priced at 98.1. State the overall outcome, i.e. $ amount of profit or loss, on the IR futures transactions.< U Your company has a future borrowing requirement in the amount of approximately $50 million. Following the company's hedging policy, you decide to hedge 60% of its interest rate exposure using IR futures and open a short position in June22 IR contracts priced at 98.6. Assume that in early June 2022, you close out the position with a long trade in the same contract, when the June22 IR contracts are priced at 98.1. State the overall outcome, i.e. $ amount of profit or loss, on the IR futures transactions.< U

Answer rating: 100% (QA)

To calculate the overall outcome of the IR futures transactions we need to consider the initial shor... View the full answer