Business, 19.11.2019 03:31 park7497

The treasurer of company a expects to receive a cash inflow of $15,000,000 in 90 days. the treasurer expects short-term interest rates to fall during the next 90 days. in order to hedge against this risk, the treasurer decides to use a fra that expires in 90 days and is based on 90-day libor. the fra is quoted at 5%. at expiration, libor is 4.5%. assume that the notational principal on the contract is $15,000,000. a. indicate whether the treasurer should take a long or short position to hedge interest rate risk b. using the appropriate terminology, identifying the type of fra used here c. calculate the gain or loss to company a as a consequence of entering the fra

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The treasurer of company a expects to receive a cash inflow of $15,000,000 in 90 days. the treasurer...