How Many 90-Day Eurodollar Futures Contracts Should a Bank Purchase

question 1

Multiple Choice

How many 90-day Eurodollar futures contracts should a bank purchase to hedge the roll-over of a 6-month, $20 million loan if loan rates and Eurodollar rates have the same volatility?

• A) 2 contracts
• B) 4 contracts
• C) 10 contracts
• D) 20 contracts
• E) 40 contracts

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Definitions:

Unit Relations

The dynamics and interactions within and between units or groups in an organization, affecting its harmony and productivity.

Post-Racial

A theoretical environment in which the concept of race is said to be irrelevant; often criticized as being an ideal rather than reality.

Self-Esteem

An individual's subjective evaluation of their own worth, including beliefs and emotions about oneself, affecting mental health and behavior patterns.

Horizontally Structured

An organizational or systemic setup where all members have equal status and decision-making is collaborative, lacking a hierarchical command chain.