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interest rate risk management lecture part 4

VVanshika3y ago
in example 6 Agne, how would we close the deal if we decide to not exercise the option since here we are selling and buying on the same date i.e 18th of September
John MoffatJohn MoffatTutor3y ago#1
The option is the tight to buy and sell futures on the date of the transaction. If they decided not to exercise the option then there would be no futures deal. They would simply borrow (or invest) the money at whatever the interest rate happened to be on that date(but, of course, would still have had the cost of buying the option).
VVanshika3y ago#2
yeah got it sir , thank you
John MoffatJohn MoffatTutor3y ago#3
You are welcome :-)
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