Equity Asset Valuation WoChrysler LLC, owned by Fiat Group, must pay floating rate interest three months from now. It wants to lock in these interest payments by buying an interest rate futures contract. Interest rate futures for three months from now settled at 94.73. In three months time Libor settles at 6.09% in the spot rate. What is the dollar amount Chrysler will pay (or receive) to settle this transaction three months from now? (Recall, the notional amount for this type of contract is $1,000,000.)
Equity Asset Valuation WoChrysler LLC, owned by Fiat Group, must pay floating rate interest three months from now. It wants to lock in these interest payments by buying an interest rate futures contract. Interest rate futures for three months from now settled at 94.73. In three months time Libor settles at 6.09% in the spot rate. What is the dollar amount Chrysler will pay (or receive) to settle this transaction three months from now? (Recall, the notional amount for this type of contract is $1,000,000.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Equity Asset Valuation WoChrysler LLC, owned by Fiat Group, must pay floating rate interest three months from now. It wants to lock in these interest payments by buying an interest rate futures contract. Interest rate futures for three months from now settled at 94.73.
In three months time Libor settles at 6.09% in the spot rate.
What is the dollar amount Chrysler will pay (or receive) to settle this transaction three months from now? (Recall, the notional amount for this type of contract is $1,000,000.)
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