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You are the Treasurer of IBM and have been charged by the CFO to borrow $100 million. Senior management agrees with your assessment that interest rates will increase over the next 12 months. You consult with your investment banker, Citibank, and are given the following options.

The yield curve is as follows:

90 day Libor                                                           0.26%

1 year                                                                      0.10%

3 years                                                                    0.72%

5 years                                                                    1.55%

10 years                                                                  2.72%

What is the shape of the yield curve? Which option should you choose and why?

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M92037592

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