QUESTION 16

It is expected

that the short-term interest will rise, and you wish to hedge the next rollover

of the bankers’ acceptance bill with a forward rate agreement (FRA).

Assume the

following applies:

Roll-over                

           :20 April

Spot rate on

20 April         

          :14.5%

FRA spot

(Bid/offer)          

          :10.0/11.0%

The cost to

the company of the rollover will equal….

1. R8 630
2. R28 027
3. R36 657
4. R 44 121