The Zinn Company plans to issue $10,000,000 of 20-year bonds in June to help finance a new research and development laboratory. The bonds will pay interest semiannually. It is now November, and the current cost of debt to the high-risk biotech company is 11%. However, the firm"s financial manager is concerned that interest rates will climb even higher in coming months. The following data are available:futures Prices: Treasury Bonds—$100,000; Pts. 32nds of 100%
Delivery Month (1)
Open (2)
High (3)
Low (4)
Settle (5)
Change (6)
Open Interest (7)
Dec
94"28
95"13
94"22
95"05
+0"07
591,944
Mar
96"03
95"25
+0"08
120,353
June
95"03
95"17
13,597
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