Business, 14.11.2019 22:31 emmaogle2003
Summa corp. must pay floating rate interest three months from now on a loan of $1m. it wants to lock in these interest payments with an interest rate futures contract. interest rate futures for three months from now settled at 94.65, for a yield of 5.35% per annum.
a. should summa corp. buy or sell a futures contract?
b. if the floating-rate interest three months from now is 6.00%, what did summa gain or lose on the futures contract and on its overall position (loan + futures contract)?
cif the floating-rate interest three months from now is 5.00%, what did summa gain or lose on the futures contract and on its overall position (loan + futures contract)?
Answers: 1
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Summa corp. must pay floating rate interest three months from now on a loan of $1m. it wants to lock...
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