Sir in this question company is going to recieve the amount in february and then is going to invest it until june for further investment in a proejct
Didnt they need to buy june futures as they would close on 30th june instead of march futures because
They will have to hedge against interest rates rising or falling when they recieve the amount and not now
Why has the examiner used march futures
Thanks in advance
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Awan co
6y ago#1They will invest the money in February and will invest at whatever the fixed interest rate is in February.
Therefore they need to hedge against interest rates changing between 'now' and February.
The examiner is correct to use March futures, March being the first maturity date after February.
Have you watched my free lectures on interest rate risk management?
Yes sir i have watched the lectures i guess this point slipped off my mind
Thankyou sir for your constant support
6y ago#3You are welcome :-)
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