The zinn company plans to issue 20000000 of 10 year bonds, Ask an Expert

Finance

The zinn company plans to issue $20,000,000 of 10 year bonds in December to help finance a new research and development laboratory .

It is now August and the current cost ofor debt to the high risk biotechnology company is 11 percent. However the firms financial manager is concerned that interest rates will climb even higher in coming months.

a) Use the data of the following table to create a hedge against rising interest rates.

b) Assume that interest rates in general increase by 200 basis points. how well did your hedge perform?

c) What is a perfect hedge? are most real world hedges perfecthe? explain.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93053591

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