I am a final year student at University and coming towards the end of my course. I have a finance module which deals with treasury management. It is an introductory module and hence not too complex. I have been given a short case, wherein, I have to choose between various derivatives to hedge a cash market position against interest rate risk. I have to evaluate between the various hedging options available and then choose one.
If you have a good knowledge of derivatives like FRA’s, Futures and Options, to be used for hedging against Interest rate risk. Please drop me a PM and we can discuss this further.
Thanks for Reading
Joanne
I think you want Bond Futures. With bonds, then interest rates fall, bonds go up in value since they get more and more attractive. If you have a cash position you want to hedge against interest rates going down. Buy bond futures - when the interest rate falls, the price on the futures contract goes up. So although you are losing interest on your cash position, you are making money on your futures contracts.
