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Dear sir,
Awan receive 48m in Feb and invest in jun.
For Future strategy:
I think we will buy future now ( at price 94.76 of March contract so i=5.24%) and sell to close out future (at price 94.55 so i = 5.45%).
I think it should be Gain from future because buy at low rate sell at high ra4te
Why anwser is loss from future?
And why dont we choose Jun future contract?
Thanks sir,In future you must ask in the Ask the Tutor Forum if you are wanting me to answer – this forum is for students to help each other.
The depositing of the money will start on 1 February and therefore we deal in the futures ending on the first date after 1 February – so March futures.
They do indeed buy at 94.76 and sell at 94.55. Given that they are selling at a lower price than they bought at, they make a loss on the futures.
I do suggest that you watch my free lectures on interest rate risk management, where all of this is explained (with examples).
Thank you so much for your kindness.
I will note from next time to post my question in correct forum.^-^
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