What is the party that sells the dollar interest rate

Assignment Help Finance Basics
Reference no: EM133115313

The 3-month December 2022 dollar interest rate futures contract on the dollar is currently priced at 96.00 and the contract has a nominal value of 1 million dollars.

(i) What is the party that sells the dollar interest rate futures contract agreeing to?

(ii) You are a speculator and think the 3-month interest rates on the dollar will be 2% in December, would you buy or sell the contract? Explain your reasoning.

(iii) How much profit in dollars would you make if you take the action based on part (ii) and are proved right i.e., the 3 month interest rate on the dollar is 2% in December? Show your calculations.

(iiv) What 3-month dollar interest rate in December 2022 will give a break-even position for the buyer of the contract? Explain your reasoning.

(v) What is the profit (+) or loss (-) for the seller of the contract if the 3-month dollar interest rate in December 2022 is 5%? Show your calculations.

Reference no: EM133115313

Questions Cloud

Provide a long term outlook of the stock markets : Carefully explain how you could use the dividend discount model to obtain an equation which can be used to provide a long term outlook of the stock markets.
Achieve a homemade dividend policy : Discuss the imperfections that may make it impossible to achieve a homemade dividend policy.
What is the price of stock today : Winchitter Corp. just paid a dividend of $2.50 per share. The company will increase its dividend by 8 percent in one year and by 5 percent in two years. After t
MGM366-international business expansion plan : MGM366-Anything else that you deem important to support your international business expansion plan.
What is the party that sells the dollar interest rate : The 3-month December 2022 dollar interest rate futures contract on the dollar is currently priced at 96.00 and the contract has a nominal value of 1 million dol
Provide non-buggy software for the client : Program with a role that is not Security then security should be alerted with the employee's name - implementing the above programs in an Object Oriented
What coupon rate should be applied to the new bonds : The company evaluates the potential of issuing a third bond that pays an annual coupon of $35, What coupon rate should be applied to the new bonds
Calculate the npv of venture : Windstar Enterprises is considering a new business venture. You are the newly hired financial analyst who must examine the viability of this venture.
Financing and investing decisions : You believe that both financing and investing decisions contain new information of firm value perceived by the investors. Thus, stock price reacts positively or

Reviews

Write a Review

Finance Basics Questions & Answers

  Define and discuss the concepts of risk and return also

define and discuss the concepts of risk and return. also discuss the importance of portfolio diversification and the

  Comprehensive financial analysis of two australian banks

Perform a comprehensive financial analysis for Bank of Queensland and Bendigo and Adelaide Bank for the past three years and provide interpretation of the findings.

  Should crane replace or renovate the existing line

Should Crane replace or renovate the existing line? Replace or Renovate?

  Assuming a compound annual return

Carmine wishes to save $1,100,000 for retirement, which is 30 years away. How much must be saved at the end of each year to reach this goal, assuming a compound annual return of 7%?

  Discuss the importance of trust in business

Discuss the importance of trust in business. Cite at least two examples. What happens when trust is lost?

  Compute z values for each and comment on your findings

A recent article in the Myrtle Beach Sun Times reported that the mean labor cost to repair a color television is $90 with a standard deviation of $22. Compute z values for each and comment on your findings

  One-year return distribution of startup inc

The table? here, shows the? one-year return distribution of Startup Inc. Calculate? the:

  Managing risk to the firm

(Hedging principle) A popular theory for managing risk to the firm that arises out of its management of working capital (that is, current assets and current lia

  What tax rate would an investor be indifferent

At what tax rate would an investor be indifferent between these two bonds?

  Calculate the net present value of investment

Wack Jendler, a manager of the Marshmallow Division of Stay Puft, Inc., has the opportunity to expand the division by investing in additional machinery costing.

  What is break-even stock price

You buy a put option on a stock for a premium of $2.17. The current stock price is $53, and the option strike price is $43. What is your break-even stock price?

  What is the break-even probability of collection

How do I calculate, what is the expected profit of granting credit? What is the break-even probability of collection?

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