A French MNC wants to lock in the cost of borrowing on a 9-month USD 45 million loan to be taken out in 3 months’ time by using Eurodollar futures contracts. How many Eurodollar futures contracts in total will be sold by the French MNC in order to hedge its cost of borrowing?Question 10Answera.135b.1c.9d.145e.None of the options in this question are correct.

6.You are the treasury manager of a bank and you know that the bank will need to borrow.$15 million for 3 months in two months time.Interest rates are currently 6.8% and the current quoted price for bank accepted bills futures contracts expiring in 3 months is 92.4.(Assume 30 days each month,365 days in a year,and futures contracts have a standard $1 million face value) (a)Today,what position would you take in the futures market to hedge this risk? Enter"1"for buy/long futures contracts or "2" for sell/short futures contracts (b)After two months,interest rates fall to 6.55% and the quoted price for bank-accepted bills futures contracts is 92.9. What is the profit or loss on the futures market?(for a loss enter a negative number) $ (round your answer to two decimal places) What is the profit or loss on the physical market?(for a loss enter a negative number) $ (round your answer to two decimal places) (c)Was this a perfect hedge? Enter"1"for yes and "2"for no

Calculate the initial value of a Eurodollar futures contract given a current futures price of 92.55.Question 4Answera.None of the options in this question are correct.b.USD1,000,000c.USD988,750d.USD23,887,500e.USD981,375

To hedge against a loan of CCU 100 million that the firm wishes to take three months from now, its CFO is like to use the futures market. Place the following actions in the correct sequence in order to help him hedge the risk: (a) Borrow CCU 100 million in the spot market three months from now; (b) Sell CCU 100 million in the futures market now; (c) Buy CCU 100 million in the futures market three months from now. a-->c-->b c-->b-->a b-->a-->c a-->b-->c

Three days ago, you entered into a futures contract to sell €62,500 at $1.50 per €. Over the past three days the contract has settled at $1.50, $1.52, and $1.54. How much have you made or lost?Group of answer choicesLost $0.04 per € or $2,500Lost $0.06 per € or $3,750Made $0.04 per € or $2,500none of the options

A company enters into a long futures contract to buy 1,000 units of a commodity for $20 perunit. The initial margin is $6,000 and the maintenance margin is $4,000. What futures pricewill allow $2,000 to be withdrawn from the margin account?(5 marks)d) What is marking-to-market?(5 marks)e) Use the following data for gold and platinum futures (where prices are in dollars per troyounce and margin account balances do not earn any interest) to answer the questions thatfollow:Trading June Gold Futures April Platinum FuturesDate 100 troy oz. per contract 50 troy oz. per contractJan 20 1,594.50 1,874.50Jan 21 1,592.40 1,878.50Jan 22 1,597.70 1,883.10BE332-6-AU/3Suppose that you go short two contracts of April platinum futures on January 20 and longthree contracts of June gold on January 21. Then how much the value of your portfolio at theclosing of January 22 has changed by?(5 marks)(TOTAL: 25 MARKS)QUESTION TWOa) The basis strengthens unexpectedly. How does it affect the position of a short hedger?(5 marks)b) On March 1 the spot price of a commodity is $20 and the July futures price is $19. On June1 the spot price is $24 and the July futures price is $23.50. A company entered into a futurescontract on March 1 to hedge the purchase of the commodity on June 1. It closed out itsposition on June 1. What is the effective price paid by the company for the commodity?(5 marks)c) On March 1 the price of a commodity is $300 and the December futures price is $315. OnNovember 1 the price is $280 and the December futures price is $281. A producer enteredinto a December futures contracts on March 1 to hedge the sale of the commodity onNovember 1. It closed out its position on November 1. What is the effective price receivedby the producer?(5 marks)d) How many types of traders are there in a derivative security market and who are they?(5 marks)BE332-6-AU/4e) Suppose that the standard deviation of monthly changes in the price of commodity A is $2.The standard deviation of monthly changes in the futures price for a contract on commodityB (which is similar to commodity A) is $3. The correlation between the futures price and thecommodity price is 0.9. What hedge ratio should be used when hedging a one monthexposure to the price of commodity A?(5 marks)(TOTAL: 25 MARKS)END OF SECTION A