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You intend to hedge a floating rate payment on a $50 Million notional with a reset date of 3/18/16 and payment date of 6/20/16. The interest rate of the payment will equal 3-month libor as of 3/18/16. You short 50 EDH7 contracts at 99.25. What is your net payment (loan payment + futures P/L) if 3m libor on 3/18/16 turns out to be .9%?
a. 117,500 b.
b. 99305.55
c. 98750
d. 980000
Define the following financial concepts and describe how managers use the concept in decision-making:
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The process through which you built numerous situations in order to get the possible distribution of the NPVs is called:
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