18. Suppose a company needs to borrow $1 million for 3 months in May next year.

Question

18. Suppose a company needs to borrow $1 million for 3 months in May next year. What action can it take to hedge against the interest rate movement? A. Buy Eurodollar futures expiring in May next year. B. Short Eurodollar futures expiring in May next year. C. Buy S&P 500 index futures expiring in May next year. D. Short S&P 500 index futures expiring in May next year. 18. Suppose a company needs to borrow $1 million for 3 months in May next year. What action can it take to hedge against the interest rate movement? A. Buy Eurodollar futures expiring in May next year. B. Short Eurodollar futures expiring in May next year. C. Buy S&P 500 index futures expiring in May next year. D. Short S&P 500 index futures expiring in May next year.

Explanation / Answer

D. Short S&P 500 index futures expiring in May next year.

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