Runaway Bank Ltd is expecting a cash inflow of $500 000 in one month,which it intends to invest in 90-day bank bills.Management of the company has chosen to hedge against fluctuations in interest rates by hedging with a bank bill futures contract.When the company enters the hedged position,the yields are 10.4% p.a.(spot)and 10.6% p.a.(futures).When the hedge is reversed,the yields are 7.6% p.a.(spot)and 7.78% p.a.(futures).Including the gain from the futures,what will be the implied yield that Runaway Bank Ltd receives?

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The Answer of Runaway Bank Ltd is expecting a cash inflow of $500 000 in one month,which it intends to invest in 90-day bank bills.Management of the company has chosen to hedge against fluctuations in interest rates by hedging with a bank bill futures contract.When the company enters the hedged position,the yields are 10.4% p.a.(spot)and 10.6% p.a.(futures).When the hedge is reversed,the yields are 7.6% p.a.(spot)and 7.78% p.a.(futures).Including the gain from the futures,what will be the implied yield that Runaway Bank Ltd receives?

Runaway Bank Ltd Is Expecting a Cash Inflow of $500