If interest rates increases, the Eurodollar futures price also increases.
True
False
Answer: False
Eurodollar futures price and interest rates move in opposite
direction, so if one increases the other will decrease.
If interest rates increases, the Eurodollar futures price also increases. True False
To hedge interest rate risk associated with its Eurodollar deposits, a company should buy Eurodollar futures contracts. true or false?
True or False? If the price of money (e.g., interest rates and equity capital costs) increases due to an increase in anticipated inflation, the risk-free rate will also increase. If there is no change in investors' risk aversion, then the market risk premium (rM − rRF) will remain constant. Also, if there is no change in stocks' betas, then the required rate of return on each stock as measured by the CAPM will increase by the same amount as the...
The value of a forward contract is always equal to $0. True False When one agrees on a forward contract, the buyer pays the forward price to the seller today. True False When 3-month LIBOR is expected to rise, Eurodollar futures price will decrease. True False To protect against future short-term interest rate decrease, a bank should long Eurodollar futures today. True False
A trader uses 3-month Eurodollar futures to lock in a rate of interest on a $7.5 million investment for 12 months. How many contracts are required? Should the trader buy or sell futures?
A 3-month Eurodollar futures contract starts with a price of 97.72 and by the time it is sold it is priced at 98.56. If three contracts are shorted, what is the overall gain or loss?
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?
You bought one Eurodollar futures contract, if interest rate declines, you will have a gain loss
True or false? The lower the level of interest rates, the greater a bond's price sensitivity to interest rate changes.
Statements True False When the Fed increases the money supply, short-term interest rates tend to dedine. Actions that lower short-term interest rates will always lower long-term interest rates. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in the United States
you entered a eurodollar futures position earlier today as the lender (long position) at a price of 94.98. the price has closed to 95.05. How much has your position gained or lost? A. $700 B. $175 C. $-175 D. $-350 E. $-700