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Pliming company must pay floating interest three months from now. It wants to lock in...

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Finance

Pliming company must pay floating interest three months from now. It wants to lock in these interest payments by selling a Eurodollar futures contract (hint: notional principal of USD 1M). The 3-month Eurodollar futures contract settles at 93.07, for a yeild of 6.93% per annum.

Hint: future price(F0)=100-contract rate ; future price (Ft)=100-LIBORT

1)if the spot LIBOR three months from now is 6.00%, calculate profit per one Eurodollar futures contract.

2)if the spot LIBOR three months from now is 8.00%, calculate profit per one Eurodollar futures contract.

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