Assume your bank is considering the problem of raising $80 million in money market funds to cover a loan request from one of its largest corporate customers.
• What would you recommend to the fund management department regarding how and where to raise the money needed, in view of the fact that money market interest rates will rise substantially in the next six weeks?
• How would your recommendation change if money market rates were expected to decline over the next six weeks?
• Which funding source would appear most attractive to you under the different scenarios?