Exhibit 21 -Refer to Exhibit 21

question 71

Multiple Choice

Exhibit 21.3
Use the Information Below for the Following Problem(S)
As a relationship officer for a money-center commercial bank, one of your corporate accounts has just approached you about a one-year loan for $3,000,000. The customer would pay a quarterly interest expense based on the prevailing level of LIBOR at the beginning of each quarter. As is the bank's convention on all such loans, the amount of the interest payment would then be paid at the end of the quarterly cycle when the new rate for the next cycle is determined. You observe the following LIBOR yield curve in the cash market:
$\begin{array}{ll}90 \text {-day LIBOR } & 4.70 \% \\180 \text {-day LIBOR } & 4.85 \% \\\text { 270-day LIBOR } & 5.10 \% \\\text { 360-day LIBOR } & 5.40 \%\end{array}$
-Refer to Exhibit 21.3.If the bank wanted to hedge its exposure to falling LIBOR on this loan commitment,describe the sequence of transactions in the futures markets it could undertake.

• A) Buy 3 Eurodollar futures contracts that expire at the end of the first quarter.
• B) Buy 3 Eurodollar futures contracts that expire at the end of the first quarter, 3 that expire at the end of the second quarter, and 3 that expire at the end of the third quarter.
• C) Sell 3 Eurodollar futures contracts that expire at the end of the year.
• D) Sell one Eurodollar futures contract that expires at the end of the first quarter, one that expires at the end of the second quarter, and one that expires at the end of the third quarter.
• E) Buy 3 Eurodollar futures contracts that expire at the end of the year.

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Definitions:

Extraversion

A personality trait characterized by energy, positive emotions, and the tendency to seek out stimulation and the company of others.

Introversion

Introversion is a personality trait characterized by a focus on internal feelings rather than external sources of stimulation, often involving a preference for solitude or small group interactions.

Libido

In psychoanalytic theory, a term used by Sigmund Freud to describe the energy derived from sexual desires and instincts.

Life Energy

A concept in certain theories of psychology that describes a fundamental force vital for personal development and psychological health.