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Question 8.P.4: Your financial firm needs to borrow $500 million by selling ...

Your financial firm needs to borrow $500 million by selling time deposits with 180-day maturities. If interest rates on comparable deposits are currently at 4 percent, what is the cost of issuing these deposits? Suppose interest rates rise to 5 percent. What then will be the cost of these deposits? What position and types of futures contract could be used to deal with this cost increase?

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