How well did your hedge perform

Assignment Help Financial Management

Reference no: EM132066116

The zinn company plans to issue $20,000,000 of 10 year bonds in December to help finance a new research and development laboratory .

It is now August and the current cost ofor debt to the high risk biotechnology company is 11 percent. However the firms financial manager is concerned that interest rates will climb even higher in coming months.

a) Use the data of the following table to create a hedge against rising interest rates.

b) Assume that interest rates in general increase by 200 basis points. how well did your hedge perform?

c) What is a perfect hedge? are most real world hedges perfecthe? explain.

Reference no: EM132066116

Questions Cloud

Production possibility curve : Assume there is a price floor imposed on a good which is above the equilibrium price. Which of the following changes would reduce the size of the surplus?

Experiencing population growth : Suppose there are two very similar countries. Both countries have the same population and neither is experiencing population growth

Experiencing population growth : Suppose there are two very similar countries Both countries have thesame population and neither is experiencing population growth (that is, N is identical

Describe the radical and sceptical views on globalization : 1. Briefly describe the radical and sceptical views on globalization

How well did your hedge perform : Assume that interest rates in general increase by 200 basis points. how well did your hedge perform?

Did you happen to provide othe financial statements as well : Did you happen to provide othe financial statements as well? The balance sheet, cash flow and break even?

Prepare an income statement for the month : Prepare an income statement for the month using the variable costing method and Prepare an income statement for the month using the absorption costing method

Describe the factors that influence conformity : Describe how group influences affect social relationships as offenders make progress through support services.

Steady-state level of capital : Its depreciation rate is 5% and its investment rate is 25%. What is its steady-state level of capital?

User Account

All Pages