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Topic: BEC hedging strategies (

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KOOL.FOREVER
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Newbie

Joined: 04 May 2012
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Posts: 2

Posted: 04 May 2012 at 15:30 \| IP Logged

Can anyone explain to me the following since i am having
trouble understanding hedging concept.

If management has a variable rate short-term loan and is
concerned about the volatility of short-term interests,
which of the following would not be an effective hedging
strategy?

A)Enter into a forward contract to sell treasury bonds in
the future
B)Enter into a forward contract to purchase treasury
bills in the future
C)Enter into an interest rate swap
D) Purchase a short position in the treasury bill futures
market.

musicamor04
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Regular

Joined: 05 Oct 2011
Location: United States
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Posts: 155

Posted: 09 May 2012 at 09:03 \| IP Logged

I don't know the answer to this, but will research and post once I find the answer. What answer is provided to you in your review material?

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KOOL.FOREVER
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Joined: 04 May 2012
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Posted: 09 May 2012 at 16:23 \| IP Logged

answer is B

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