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Homework 3 Adapted from Fundamentals of Futures and Options Markets, 7th ed., John C. Hull. Chapter 6 Q1. Suppose your company needs to borrow $10

Need the attached 2 questions answered in Excel with Formulas if applicable.
Homework 3 Adapted from Fundamentals of Futures and Options Markets, 7th ed., John C. Hull. Chapter 6 Q1. Suppose your company needs to borrow $10 million for 3 months starting on September 2016. If your company wants to lock in the borrowing interest rate, what should you do now? Be specific. What is the interest rate can you lock in now? Chapter 7 Q2. In an existing (not new) interest rate swap, your company receives 5.00% (fixed) per annum and pays 3­month LIBOR in return on a notional principal of $100 million with payments being exchanged every 3 months. The swap has a remaining life of 13 months. This implies the next cashflow will be exchanged in 1 month and the last exchange occurred 2 months ago. The current LIBOR rates for different maturities are given as follows. Maturity LIBOR (with continuous compounding) 1 month 3.00% 4 months 3.25% 7 months 3.50% 10 months 3.75% 13 months 4.00% On the other hand, the 3­month LIBOR rate 2 months ago (when the last cash exchange occurred) was 4.00% per annum with quarterly compounding. What is the current value of this swap to your company? Hint: See pages 170­175.
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Solution to chapter 6 and 7.xlsx

Amount to be borrowed
Tenure
Starting time $10,000,000
3
Sep-16 In order to lock the future interest rate on the borrowing, the company has to make use of Eurodollar futures interest rate. This is...

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