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John Moffat.
John Moffat.-
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Saimon
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Sir in your lecture, when calculating the “FUTURE PRICE” at transaction date you have calculated the basis as follow
Basis= (100 – Libor rate) – Future price
now i want to calculate Lock in rate for future at transaction date so does this lock in rate indicate the Libor lock in rate???
Do i have to calculate “overall expected lock in rate” to calculate the outcome of future hedge???
(Overall expected lock in rate means = Libor lock in rate + credit spread)So which one is the actual future price at transaction date “libor lock in rate” or “overall expected lock in rate”
I hope you understand what i m trying to say
John Moffat
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The lock-in rate is what one might call the LIBOR lock-in rate. If the company is paying more than LIBOR then the same amount needs adding to the lock-in rate.
Saimon
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