Pension fund you are managing is expecting inflow of fund

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Frontier Bank offers one-year loans with a stated rate of 7.5 percent, charges a 1/4 percent loan origination fee, imposes a 5 percent compensating balance requirement, and has a 10 percent reserve requirement. What is the return to the bank on these loans? Show your calculation.

Suppose that the pension fund you are managing is expecting an inflow of funds of $15 million next year and you want to make sure that you will earn the current interest rate of 6% when you invest the incoming funds in long-term bonds. How would you use the futures market to do this?

A thrift is planning to buy Treasury securities next month. To hedge the risk, should it buy or sell futures contracts? Explain

Reference no: EM131048537

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