Identify the type of fra used by the financial manager

Assignment Help Finance Basics
Reference no: EM132618183

A financial manager needs to hedge against a possible decrease in short-term interest rates. He decides to hedge his risk exposure by going short on an FRA that expires in 90 days and is based on 90-day Libor. The current term structure for Libor is as follows:

Term (Days) Interest Rate (%)

30 5.83
90 6
180 6.14
360 6.51

Identify the type of FRA used by the financial manager using the appropriate terminology and Calculate the rate the manager would receive on this FRA.

It is now 30 days since the manager took a short position in the FRA. Interest rates have shifted down, and the new term structure for Libor is as follows:

Term (Days) Interest Rate (%)

60 5.5

150 5.62

Calculate the market value of this FRA based on a notional principal of $15,000,000.

Reference no: EM132618183

Questions Cloud

Connected to the internet to their company network : Describe a solution to securely connect a remote worker from their home and connected to the Internet to their company network.
Asset management ratios : Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested
Secure mobile devices and safety precautions : Create an informative poster to display throughout the office that highlights ways to secure mobile devices and safety precautions.
Calculate the basic earnings per share of Mark Ltd : During the year ended 30 June 2020, the company made net profit after tax of $450 000. Calculate the basic earnings per share of Mark Ltd
Identify the type of fra used by the financial manager : Identify the type of FRA used by the financial manager using the appropriate terminology and Calculate the rate the manager would receive on this FRA.
Journal entries for the years ending june : Journal entries for the years ending 30 June 2018, 2019 and 2020 in accordance with AASB116 Property, Plant and Equipment
Cumulative method of voting : How many votes may she cast for herself under the cumulative method of voting? Round your answer to the nearest whole number.
Earnings per share and on the price of the stock : West Wind, Inc. has 5,100,000 shares of common stock outstanding with a market value of $75 per share. Net income for the coming year
What are main data preprocessing steps : Why is the original/raw data not readily usable by analytics tasks? What are the main data preprocessing steps?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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