Determine the annualized rate of return

Assignment Help Business Management
Reference no: EM132558257

Let's say an investor who often invests her firm's excess cash in the Eurodollar market is considering the possibility of investing $20 million for 180 days directly in a Eurodollar CD at 6.15 percent. As an alternative, she considers the fact that the 90-day rate is 6 percent and the price of a Eurodollar futures expiring in 90 days is 93.75 (the IMM index). She believes that the combination of the 90-day CD plus the futures contract would be a better way of lending $20 million for 180 days. Suppose she executes this strategy and the rate on 90-day Eurodollar CDs 90 days later is 5.9 percent. Determine the annualized rate of return she earns over 180 days and compare it to the annualized rate of return on the 180-day CD. Find Day 0, 90 and 180 to solve. Compare your results and briefly discuss.

Reference no: EM132558257

Questions Cloud

Can you accept this type of fee arrangement : Your CPA firm has performed an annual audit for a client for many years. Can you accept this type of fee arrangement
What is the value of accounts receivables : The company' credit term for their customers is 30 days. The Total sales is 275000. What is the value of accounts receivables at the end of the year
Cpmpute when indirect ownership interests exist : Compute and contrast the two (2) different consolidation processes of serial and single consolidation techniques when indirect ownership interests exist
Explain how the law of diminishing marginal returns : Explain how the law of diminishing marginal returns is relevant when developing policies aimed at reducing the growth rate of healthcare expenditures.
Determine the annualized rate of return : Let's say an investor who often invests her firm's excess cash in the Eurodollar market is considering the possibility of investing
What is the current value of the loan : $200 per month for 10 years at 12% annual percentage rate with monthly compounding. The first payment occurs today. What is the current value of this loan?
Record the purchase on January : Summers Company paid the balance due. Record the purchase on January 2 and the subsequent payment on January 15
Find day 0-90 and 180 to solve : Let's say an investor who often invests her firm's excess cash in the Eurodollar market is considering the possibility
Determine the consolidation processes of serial : Determine and contrast the two (2) different consolidation processes of serial and single consolidation techniques when indirect ownership interests exist.

Reviews

Write a Review

Business Management Questions & Answers

  Collaborative or alliance addressing

What health-based social or behavioral problem is the collaborative or alliance addressing? Give a brief overview.

  Include a clear and concise introduction

Format your case study assignment paper so that the three questions asked below are clearly defined. Double space your work, cite your work, limit quotes, and edit your work well for spelling, grammar, and punctuation errors. If you use any quot..

  What evidence from additional sources supports your opinion

What evidence from additional sources supports your opinion? What are the authors' main points for conducting the study?

  Possible in government contracting

What are the implications of a U.S. policy to "buy American" wherever possible in government contracting?

  Is a telephone interview inappropriate for a survey

Is a telephone interview inappropriate for a survey that has as one of its objectives a complete listing of all possible advertising media a person was exposed to in the last week? Why or why not?

  The implementation of clinical information systems

During the implementation of a CIS (clinical information systems), what is the impact on stakeholders across the organization? How does it impact staff? Patient

  Evaluate potential csr opportunities

As an executive, what criteria do you use to evaluate potential CSR opportunities?

  First month of operations

During January, its first month of operations, Knox Company accumulated the following manufacturing costs: raw materials $6,100 on account

  Bombs as disruptive as most people think

Is the impact of the radiation from a dirty bombs as disruptive as most people think?

  Relationship selling and traditional selling

Discuss the key differences between relationship selling and traditional selling.- What are the key differences between relationship selling and traditional methods of selling?

  What are four communication flows associated with business

What are four communication flows associated with business? What are some examples of how thes flows are used for communication

  Secure a job in the healthcare industry

List at least five strategies you will use to search for and secure a job in the healthcare industry. Why do you believe this will be successful?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd