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  • IFM

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    skalidas
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    A company needs to raise $10 million of commercial paper in November for a period of 180 days. To protect itself against the possibility that interest rates may rise before it makes the issue, the treasurer decided to hedge the exposure using January Eurodollar futures contract. A trader has gone long on 5 Brent crude futures for December settlement at $26. Per barrel. The minimum contract size for Brent futures contract is 100,000 barrel. The initial margin is $50,000 and the maintenance margin is $30,000.

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    A company needs to raise $10 million of commercial paper in November for a period of 180 days. To protect itself against the possibility that interest rates may rise before it makes the issue, the treasurer decided to hedge the exposure using January Eurodollar futures contract. A trader has gone long on 5 Brent crude futures for December settlement at $26. Per barrel. The minimum contract size for Brent futures contract is 100,000 barrel. The initial margin is $50,000 and the maintenance margin is $30,000.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca DOC, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    64 vizualizări1 pagină

    IFM

    Încărcat de

    skalidas
    A company needs to raise $10 million of commercial paper in November for a period of 180 days. To protect itself against the possibility that interest rates may rise before it makes the issue, the treasurer decided to hedge the exposure using January Eurodollar futures contract. A trader has gone long on 5 Brent crude futures for December settlement at $26. Per barrel. The minimum contract size for Brent futures contract is 100,000 barrel. The initial margin is $50,000 and the maintenance margin is $30,000.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca DOC, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    din 1

    IFM 1. Explain five important regulations governing exports 2. Explain five important regulations governing imports 3.

    What are the different instruments that comprise ECBs and explain some of the conditions that need to be fulfilled to be eligible under the Automatic Route of the scheme 4. A treasurer of a multinational company in July realizes that the company needs to raise $10 million of commercial paper in November for a period of 180 days. Commercial paper of comparable quality is currently yielding 6.50%, a cost which the treasurer finds acceptable. To protect itself against the possibility that interest rates may rise before it makes the issue, the treasurer decided to hedge the exposure using January Eurodollar futures contract. January Eurodollar futures contract are currently trading at 94.00. You are required to a. State how should the treasurer hedge the exposure through Eurodollar futures contract? How many contracts are required to hedge? b. If the January futures contract in November closes at either 95.00 or 93.00, calculate the cost of CP to the company. 5. A trader has gone long on 5 Brent crude futures for December settlement at $26.32 per barrel. The minimum contract size for Brent futures contract is 100,000 barrel. The initial margin is $50,000 and the maintenance margin is $30,000. The futures closes at the following prices on the next ten trading days: Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10 $ 26.19 $26.30 $26.45 $26.48 $26.34 $26.21 $25.98 $25.87 $25.90 $25.95

    The trader will take out the profit out of the margin account whenever he gets the opportunity to do so. You are required to a. Prepare the margin account showing all the cash flows. b. Find the profit/loss for the trader after 10 trading days 6. Write short notes on any two a. Options b. Letters of Credit c. Classical Gold Standard

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