hassan

CFABLACKBELT Wrote:
-------------------------------------------------------
> A was my original reasoning based on my initial
> thoughts on how this works.
>
> Since reading the responses to the other post, B
> makes sense... but I hate to be the bearer of bad
> news b/c the answer is C...
>
> "If he adds a short position in Eurodollar futures
> to the existing liability in the correct amount,
> he is able to lock in a specific interest rate. A
> short Eurodollar position will increase in value
> if interest rates rise because the contract is
> quoted as a discount instrument so increases in
> rates reduce the futures price."

Damn, I was torn between B and C and went with B since it mentioned interest rate risk.

NO EXCUSES