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Calculate profit per one eurodollar futures contract

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Reference no: EM132853759

San Bernardino Pluming Company must pay floating interest three month from now. It wants to lock in these interest payments by selling a Eurodollar futures contract (hint: notional principal of USD1M). The 3-month Eurodollar futures contract settled at 93.07, for a yield of 6.93% per annum.

Hint: Future Price (F0) = 100 - Contract Rate; Future Price (FT) = 100 - LIBORT

1) If the spot LIBOR three months from now is 6.00%, calculate profit per one Eurodollar futures contract.

2) If the spot LIBOR three months from now is 8.00%, calculate profit per one Eurodollar futures contract.

Reference no: EM132853759

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