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How could she lock in the purchase price on her t-bills

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Reference no: EM133049601

Question - Suppose Ms. Hunter anticipates a cash inflow of $9.875 million in September that she plans to invest in ten $1 million face value T-bills with a maturity of 91 days. Suppose there is a September T-bill futures contract trading at a discount yield of 5%.

a) Describe the interest rate risk that she is facing. Is it better if interest rates increase or decrease?

b) How could she lock in the purchase price on her T-bills?

c) What will be the locked in purchase price?

Reference no: EM133049601

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