How many futures contracts will it need to hedge its risk

Assignment Help Financial Management

Reference no: EM132057420

1. Summarize the differences between:

1. angel financing

2. venture capital

3. private equity

2. The Kromwell Community Bank's asset portfolio has an average duration of 6 years and its liability portfolio has an average duration of 2.5 years. The bank has $500 million in total assets and $450 million in liabilities. The Kromwell Community Bank is thinking about hedging its risk by using a Treasury Bond futures contract whose underlying's duration is 7.5 years and has a price of $98,000. How many futures contracts will it need to hedge its risk?

A. buy 2,381 contracts

B. sell 2,381 contracts

C. buy 2,551 contracts

D. sell 2,551 contracts

Reference no: EM132057420

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