Answer A : Eurodollar contract has moved 0.34 ticks downside.
Answer B : Investor should sell 7 contracts of EURODOLLAR future if he want to lock the current rates.
Answer C : Investor will made a loss of $6800 per lot who bought the contract at 94.90.
Need detailed answer. Thanks! it & A corporation wilkreceive USD7 million in 3 months' time for...
An investor uses 3-month Eurodollar futures contracts to lock in the rate of interest paid on a $25 million floating rate note for the next nine months. Assume that Eurodollar futures contracts which mature in 3 months, 6 months and 9 months are traded. What should the investor do? Should the investor buy or sell contracts? How many contracts should the investor trade? Which maturities should the investor choose?
A corporate treasurer would like to use 3-month Eurodollar futures contracts to lock in the rate of interest paid by the corporation on a one-year $100 million floating rate note which will be issued in 3 months. Assume that Eurodollar futures contracts which mature in 3 months, 6 months, 9 months, and 12 months are traded. How many contracts should the treasurer trade? Which maturities should the treasurer choose?
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