If a firm is expecting to issue commercial paper in 90 days, and is worried about interest rates rising and having to issue the commercial paper at a higher rate (i.e. a lower price), what strategy should it use to hedge this risk?

Question

Quizplus · Accepted Answer

To make a futures gain to offset a loss if interest rates rise (prices fall), a short futures position should be taken.

If a Firm Is Expecting to Issue Commercial Paper in 90