A company plans to borrow $6 million for 3 months starting in December at LIBOR plus 0.7% (70bps). • What is the December 12 Eurodollar futures contract quoted at now? (you will find it one various of the homepages we visited in class) Dec 2012 Eurodollar futures contract is quated at 99.435. • What rate can the company lock in by using the Eurodollar futures contract? • What position should the company take in the contracts to fully hedge against an increase in interest rates during on its short-term loan? • If the actual 3-month rate turns out to be 1.4%, what is the final settlement pric

Question

A company plans to borrow $6 million for 3 months starting in December at LIBOR plus 0.7% (70bps). •	What is the December 12 Eurodollar futures contract quoted at now? (you will find it one various of the homepages we visited in class)  Dec 2012  Eurodollar futures contract is quated at 99.435. •	What rate can the company lock in by using the Eurodollar futures contract? •	What position should the company take in the contracts to fully hedge against an increase in interest rates during on its short-term loan?  •	If the actual 3-month rate turns out to be 1.4%, what is the final settlement pric