Euro Dollar Futures

balajismz
Finance Junkie
Posts: 63
Joined: Mon Nov 05, 2012 9:13 am

Euro Dollar Futures

Postby balajismz » Sat Nov 10, 2012 10:06 am

A.) Euro Dollar futures are designed to lose money if int rates rise.

B.) FRAs are designed to gain money if int rates rise

Which of the above is true??

Balaji

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soumyadip.0701
Posts: 2
Joined: Wed Oct 24, 2012 10:56 pm

Re: Euro Dollar Futures

Postby soumyadip.0701 » Sat Nov 10, 2012 10:18 am

Bala,
Correct answer will be A. Eurodollar futures are designed in such a manner that it loses money with an increase in interest rates.
AS for a FRA , if you are LONG a FRA you essentially LONG some benchmark rates say LIBOR, here if the spot rates fall you get a better payoff ( LIBOR- St)
:)


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