A Fund Manager Plans to Invest in a $40 Million

question 2

Essay

A fund manager plans to invest in a $40 million parcel of 90-day bills in December.Demonstrate how they can hedge the risk of an unexpected rate fall in the BBSW given December BAB futures are now trading at 96.55 and it turns out that the BBSW in December is 3.25%.

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Definitions:

Corporate Governance

The structures, policies, and practices in place within an organization to ensure accountability, fairness, and transparency in the company's relationship with its stakeholders.

Inside Directors

Board members who are also employees, officers, or stakeholders in the company, providing them with detailed knowledge of its business operations.

Outside Directors

Members of a company's board of directors who are not part of the company's day-to-day operations and are often brought in for their expertise or to provide an objective perspective.

Core Values

Fundamental beliefs or principles that serve as the foundation for an organization's culture, actions, and decisions.