Eurodollar futures contracts to hedge the roll-over of a


1. JP Morgan Bank wants to use 30-day Eurodollar futures contracts to hedge the roll-over of a 1-year, two million dollars loan. How many contracts should the bank buy?

a. 4 contracts

b. 14 contracts

c. 20 contracts

d. 24 contracts

e. 28 contracts

2. Jason purchases a 90-day Eurodollar futures contract at 96.25. One day later, the interest rates rise to 5.25%. What does Jason have to do?

a. He would have to deposit an additional $3,750 into his account.

b. He would have to deposit an additional $2,550 into his account.

c. He could withdraw $3,750 from his margin account.

d. He could withdraw $2,550 from his margin account.

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Financial Management: Eurodollar futures contracts to hedge the roll-over of a
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