Exculpatory agreement-what could they do to hedge

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Reference no: EM132070132

1. An exculpatory agreement:

is the offeree's initial expression of agreement before a contract is formalized in writing

releases one party from the consequences brought about by wrongful acts or negligence

is a form of counteroffer whereby the offeree accepts part and rejects part of a contract

is an agreement that has not been fully performed by either party

none of the other choices

2. ABC International has borrowed $4,000,000 at LIBOR plus a lending margin of .65 percent per annum on a three-month rollover basis from Barclays in London. Three month LIBOR is currently 5.5 percent, but ABC is worried about an increase in three-month LIBOR 3 months from now. What could they do to hedge?

A) Buy a 3 × 9 FRA in the amount of $4 million.

B) Buy a 3 × 6 FRA in the amount of $4 million.

C) Sell a 3 × 6 FRA in the amount of $4 million.

D) Buy a 3 × 3 FRA in the amount of $4 million.

Reference no: EM132070132

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