1. JP Morgan Bank wants to use 30-day Eurodollar futures contracts to hedge the roll-over of a 1-year, two million dollars loan. How many contracts should the bank buy?
a. 4 contracts
b. 14 contracts
c. 20 contracts
d. 24 contracts
e. 28 contracts
2. Jason purchases a 90-day Eurodollar futures contract at 96.25. One day later, the interest rates rise to 5.25%. What does Jason have to do?
a. He would have to deposit an additional $3,750 into his account.
b. He would have to deposit an additional $2,550 into his account.
c. He could withdraw $3,750 from his margin account.
d. He could withdraw $2,550 from his margin account.