USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 24

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
TexMex Corporation has decided to borrow $50,000,000 for six months in two three-month issues. The corporation is concerned that interest rates will rise over the next three months. Thus, the corporation purchases a 3 * 6 FRA whereby the corporation pays the dealer's quoted fixed rate of 3.5 percent in exchange for receiving three-month LIBOR at the settlement date. In order to hedge her exposure, the dealer buys LIBOR from Newport Inc. at its bid rate of 3 percent. The notional principal is $50,000,000 and that there are 60 days between month 3 and month 6.
-Refer to Exhibit 15.18. How much compensation does the dealer receive for transaction costs, credit risk, and other costs associated with matching the FRAs?

• A) $42,700
• B) $62,500
• C) $82,000
• D) $96,300
• E) $0

Comprehend the use of portfolio or quadrant analysis in developing supply strategies.

Appreciate the complexities of environmental sustainability in supply chain management.

Identify the benefits and challenges of both single and multiple sourcing strategies.

Understand the criteria involved in supplier selection and evaluation.

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Definitions:

Integument

The natural covering of an organism or an organ, such as skin, shell, or membrane.

Telangiectasia

The expansion of small blood vessels near the surface of the skin or mucous membranes, causing visible red lines or patterns.

Comedo

A comedo is a type of acne lesion caused by the blockage of a hair follicle by sebum and dead skin cells, which can appear as blackheads or whiteheads.

Exudate

A fluid rich in protein and cellular elements that oozes out of blood vessels due to inflammation and is deposited in nearby tissues.