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FRA gives the most beneficial rate if interest rate rises, but if they fall than option will give the best outcome. I also mentioned that FRA has credit risk. And if the company is happy with it and thinks about to protect against unfavorable outcome than FRA should use. If unhappy with credit risk than futures.
And if wants to benefit from IR decline than options, but premium need to be paid in case of options.
Also I stated that we assumed no basis risk, no transaction costs, no margin to be paid. So before taking final decision take these into account.I also assume that the project is wholly equity financed .. and did you convert the real rate in nominal ?
No I have not adjusted this rate I have thought that this is the rate to use for discounting. Do not remember if there was said that it is the real rate, if it is the case than taking into accoun inflation will be correct.
there was given all equity financed rat and also borrowing rate actual was 5%, so I discounted financing side effects using this rate Annuity factor for 4 year at 5%.
what about Var who remembers? I just calculated Var at 95% and commented. what about you ?
Not because for the best but the FRA was 4-9 with 4.25 %. borrow from 4 months and duration was 5 months.
who remembers what has done in Q3? Please, write .