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As a new professional hedger, in January 2021, you are bearish with the KLIBOR futures market. You trade for RM10 millio
Posted: Tue Jan 18, 2022 1:01 pm
by answerhappygod
- As A New Professional Hedger In January 2021 You Are Bearish With The Klibor Futures Market You Trade For Rm10 Millio 1 (47.53 KiB) Viewed 49 times
As a new professional hedger, in January 2021, you are bearish with the KLIBOR futures market. You trade for RM10 million in between March 2021 and April 2021. The KLIBOR futures quoted as in January 2021: Spot month 99.35 One-month 98.75 Two-months 98.27 Three-months 97.58 Assume both markets are increasing unexpectedly by 1.5%. Required: a. Compute the hedging benefits. (10 marks) (CLO3:PLO5:05) b. Interpret the results from above. Is the strategy benefits her? Justify. (3 marks) (CLO3:PLOS:C3) c. When should the trader enter the KLIBOR futures market in order to protect from the risk arising? Construct your strategy. (6 marks) (CLO3:PLO5:C2) Why certain institutions or organization they will be charged above the KLIBOR rate? Elaborate. (4 marks) d.